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NEW FALLACIES OF MIDAS 



NEW FALLACIES OF 
MIDAS 

^ SVKVEY OF INDUSTRIAL 
^ND ECONOMIC ^PROBLEMS 



BY 

CYRIL E. ROBINSON. 

With an Introduction by 
SIR GEORGE PAISH. 



NEW YORK 
ROBERT M. McBRIDE & COMPANY 

1919. 






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PREFACE 

Books on Political Economy increase and multiply. 
They are a natural by-product of the war, which has 
caused all classes to take stock afresh of their economic 
destiny ; nor is it much wonder, when all is topsy-turvy, 
that a new diagnosis should be drawn and a new remedy 
prescribed by half-a-dozen authors in each week. 

But, while the demand for economic literature is 
great, and the supply keeps pace with the demand, 
there still perhaps lacks something. Amid all the 
maze of argument and theory, the puzzled layman 
needs some guide : yet there is no one book to give 
him precisely what he wants. We have excellent 
manuals, wide in scope, strict in method, scientific 
in approach : but too often the manual makes dull 
reading ; its language is academic, overweighted with 
a jargon of technicalities and abstract definition. 
It may be true that Socialism is " a coercive co-opera- 
tion, not merely for undertakings of a monopolisitic 
nature, but for all important productive enterprises " ; 
but, however true the words, the mind is apt to falter 
at such formal logic ; and the very need for a thorough 
exposition, which will press analysis to its extreme, 
must yet serve to blunt the writer's own enthusiasm 
and leave the reader cold. The manual, with the best 
will in the world, can seldom touch the matter into 
life. 



PREFACE 

There is another class of book, aiming at a different 
goal — I mean the monograph which isolates some 
single phase or aspect of the science, or the pamphlet 
written to propagate some theorist's special creed. 
Such, for instance, is Mr. Ramsay Macdonald's 
** Socialism " ; and such again is Mr. Belloc's " Servile 
State." From the manual's inevitable failing these 
are free. Tlicy must, at all costs, interest and con- 
vince : it is the first condition of success. Yet for 
that very reason these too will often fail to satisfy the 
reader. They preach indeed : but are at little pains 
to criticise the sermon. They assume the best or 
prophesy the worst : yet leave the reverse of the picture 
too much dark. Such books, too, are of their very 
nature selective and incomplete : behind their argu- 
ments lie many issues boldly ignored and assumptions 
unexplained. They have not space for everything : 
the problems of production, the ethics of exchange, the 
safe limits of monopoly, and the natural interaction 
of supply upon demand, how wealth is to be got before 
it can be divided, or how divided under other rival 
schemes — all this can be but lightly touched, if 
touched at all : yet all this the interested reader must, 
as he thinks things out, desire to know. There is a 
gap in the evidence ; his judgment of the case is 
insecure ; and he will be thrown back upon the manual 
after all. 

To imitate the virtues and escape the short-comings 
of both types is the chief effort of this book. It 
makes no pretence to cover all the ground ; but it 
covers much. Theories are not advanced uncritically : 
but each shall at least receive a favourable hearing, 
before it is rejected. Rather than leave the funda- 



PREFACE 

mental issues doubtful, I have begun at the beginning : 
and there can be no making matters clear without 
some monotony of formal spade-work and abstract 
definition ; yet I have tried, so far as may be, to avoid 
the use of academic phrasing or mechanical expression. 

Nor have I wished to lose from sight those ethical 
and political values, which, though they are not 
strictly economic, were far too often neglected by the 
early economists. I have tried to foresee the conditions 
upon which man's happiness must be built, as Well as 
the methods whereby his wealth is to be got. To be 
content with cold analysis is to-day impossible : 
the problems are too vital : and, though all prophecy 
is dangerous, we must needs anticipate some practical 
solution. We must confront the future in the strength 
of some reasoned faith. 

Without the advice and guidance of Sir George Paish^ 
the undertaking must have been far less ambitious. 
His kindness in writing the introductory chapter has 
placed me very much in debt : but it is perhaps the 
least of the debts I owe him. My special thanks are 
also due to Mr. A, E. Zimmern for his helpful revision 
of the chapters. 



CONTENTS 

CHAPTER PAGE 

Introduction by Sir George Paish. - - xi 
PART I. 

I. THE FALLACY OF MIDAS - - - - 7 

II. WORK 12 

III. CAPITAL - 24 

IV. THE PARADOX OF PROGRESS - - - 32 
V. LUXURIES AND NECESSITIES - ' " 39 

VI. EXTRAVAGANCE AND WASTE - - . 47 

VII. UTOPIA - - 59 

PART II. 

VIII. VALUE 79 

IX. MONOPOLY ------ 90 

X. THE POWER OF CAPITAL - - - 102 

XI. THE PROTEST OF RUSKIN - - - II6 

XII. THE RISE OF LABOUR . - - - I32 

XIII. SOCIALISM ' - 156 

XIV. FALSE SOCIALISM OR THE SERVILE STATE - 183 
XV. SYNDICALISM OLD AND NEW - - - 197 

XVI. THE RIGHTS OF THE INDIVIDUAL - - 210 

XVII. COMPROMISE - 234 

XVIII. THE NEW FALLACIES OF MIDAS - - 268 



INTRODUCTION BY SIR GEORGE PAISH 

Of the many objects for which this war was begun it is 
now beyond question that the main one was the pre- 
servation of mihtary autocracy in Germany and in 
Austria. It is now equally evident that of the many 
consequences of the war the chief one will be the 
emancipation of democracy, not merely in Germany, 
in Austria and in Russia, but throughout the world. 

In Russia, where events have moved faster than 
elsewhere, revolution is already well on its way to its 
final stages. It is true that so far a bureaucratic 
autocracy appears to have been merely replaced by 
an oligarchy. Nevertheless the eventual introduction 
of democratic government is not much in doubt, and 
it is probable that the people of Russia will for the 
future control their own destinies by means of small 
republics for local matters and of a federal republic for 
national and international affairs. 

In the Austrian Empire revolution and dissolution 
have taken place already, and probably somewhat 
similar conditions to those prevailing in Russia will be 
witnessed both in Austria and in Hungary in the early 
future. Small local republics are likely to be formed, 
and eventually some kind of federal republic, including 
the greater part of the existing Austrian Empire 
together with some of the Balkan States, will probably 
emerge from the chaos. 

In Germany the revolutionary movement towards 
democracy is causing great uneasiness to the enemy 
government, and there are strong reasons for expecting 
that before many days pass by the militarist autocracy 

xi. 



xii. INTRODUCTION 

of Germany will be forced, to yield place to a democratic 
republic. 

The nemesis now falling upon the rulers of Germany 
and of Austria, as well as upon the classes that have 
supported autocratic and military domination, will 
be an object lesson which cannot fail to be understood 
by the rest of the world, and even in countries already 
democratic a greatly increased measure of democratic 
freedom and of democratic power must result from 
the revolutions now casting their shadows in front of 
them over the enemy states. 

Already some uneasiness exists as to the effect upon 
progress and upon civilisation of the emancipation of 
the peoples from the domination of one kind or 
another to which they have hitherto been subjected 
in greater or in lesser degree in all countries. At 
such a moment it is essential for everyone to recognise 
that the increased freedom of democracy in the 
western world in modern times has brought with it not 
injury but advantage to the general well-being of the 
world, and that in democratic countries law' is more 
universally respected and more equitably administered 
than in autocratic states, while, on the whole, order 
is better maintained. 

In periods of transition disorder cannot always be 
avoided, but as soon as public opinion becomes con- 
vinced about the right course to pursue, and democracies 
mobilise their power, there is far less danger of disturb- 
ance and of any breach of law in the democratic 
countries than in autocratic states, where the interests 
of the people and of their rulers are divergent. There- 
for, after the period of transition that must inevitably 
follow upon the conclusion of peace, in which 



INTRODUCTION xiii. 

the autocratic nations will become democratic and the 
democratic nations more democratic, there will be 
less danger of disorder throughout the world than there 
has been hitherto. For all practical purposes the 
danger of democratic nations acting unjustly or 
failing to maintain order and respect for law or refusing 
to honour their obligations may be completely dis- 
regarded. The rise of democracy means a high 
standard of honour, the recognition of justice, the 
observance of law and greater security, both for life and 
for property. 

At no time did the credit of Republican France stand 
higher than it did before the war ; at no time has France 
been more highly respected or more fully trusted than 
at the present moment, and no one doubts her intention 
or her ability to honour the great debt she has incurred 
in waging this life and death struggle for democracy 
againsi autocracy, or to act justly, indeed, mercifully, 
not only towards all sections of her own people, but 
towards all other nations which desire and intend to 
live in harmony and in friendship with her, and to 
observe those principles of freedom, equality and 
brotherhood which are the glory of modern France. 

Again, democratic America, which is the greatest 
marvel of modern times, reveals clearly the increasingly 
high standards of conduct demanded by democracies. 
The credit of no country was higher than that of 
America before the war, or will be higher after the war, 
and in no country was education more highly appre- 
ciated, was there a greater love of justice, greater 
sympathy for the oppressed and the unfortunate, 
greater equality of opportunity and of self-realisation, 
a higher measure of individual happiness, or a greater 



xiv. INTRODUCTION 

rate of improvement in individual and national well- 
being. 

It is unnecessary to speak of the place that demo- 
cratic Britain holds in the family of nations. It is 
sufficient to point to the policy which the British nation 
has pursued since the passage of the great Reform Bill, 
of promoting her own well-being by contributing to 
the well-being of all the world, and to the manner in 
which her sons and her daughters wherever they were 
placed, at home, in the colonies, and abroad, voluntarily 
came forward to defend the principles of freedom and 
of justice, which are dearer to them than life itself, by 
placing all that was theirs at the service of democracy 
in the struggle in which it is still engaged. 

Thus not theory but experience of democracy proves 
that the democratic spirit is not destructive, but con- 
structive, not law breaking but law abiding, not less 
but more just than the spirit of autocracy, not wishful 
to dominate but to give freedom, not less but more 
desirous of creating high standards of honour and of 
duty. And with this experience upon which to base 
our judgment are there any reasonable grounds for 
anxiety as to the future when the democratic spirit 
shall be more widely prevalent ? Rather are there not 
greater and stronger reasons for hopefulness as to what 
the future has in store for all nations, and more es- 
pecially for the nations in which the democratic spirit 
reaches its highest development ? 

In the turmoil and uncertainties of the present 
situation, when society, more particularly in its 
political and economic aspects, is in process of complete 
reconstruction, not merely in one or two countries but 
in all countries, it is of the highest importance to 



INTRODUCTION xv. 

observe certain elementary and primary truths, in 
order that the new structure may be erected upon such 
soHd foundations, and so strongly built, as to leave no 
doubt as to its permanence, its utility and its com- 
prehensiveness. 

The first of these truths is that the structure of 
society in each nation as well as of the whole world, 
whether upon its political side or its economic, or its 
social, or its religious, must be based upon the character 
of each nation, for just as character inevitably governs 
the aspirations, the activities, and the attainments of 
individuals, in the same manner national character 
must govern the structure of nations. 

The second of these truths is that the structure of 
society in each nation cannot be mucii in advance of the 
mental and spiritual development of the average 
individual, and that no nation can rise to the level of its 
possibilities until the individual is both educated and 
enlightened. 

The third is that the economic possibilities of a nation 
in these days of international intercourse and of inter- 
national transit are governed not so much by its own 
natural resources as by the mentality and character 
of its people. 

And the last is that in a world of nations firmly bound 
together by democratic principle every nation would 
not only have world wide markets for its productions, 
but would be assisted to produce all that its natural 
resources permit it to produce or the intelligence and 
skill of its peoples render it capable of manufacturing. 
The limits hitherto placed both upon consuming power 
and upon production would therefore disappear, and 
the measure of well-being in each nation would accord 



xvi. INTRODUCTION 

with its intelligence, its knowledge and its energy. 
The possibilities of national and of international well- 
being would thus be limitless. 

By observing these fundamental matters it is not 
difficult to discover the course which the various 
nations are likely to pursue in a democratic world in 
which both individuals and nations will enjoy much 
greater freedom for their activities than hitherto, sub- 
ject only to the principles of friendship and of co-oper- 
tion which will cause them to seek to prom^ote their 
own well-being by contributing to the general welfare 
instead of seeking advantage at the expense of others. 

Thus the great mass of the Russian people are 
imaginative, idealistic, and benevolent, but at present 
they are unedncated, ill-informed and therefore 
unpractical. At the same time the natural riches of 
Russia are unlimited, and when the Russian people are 
educated, better informed and more practical Russia 
is likely to become one of the richest, if not the richest 
nation in the world, not even excepting the United 
States. 

The present character of the Russian people and their 
present development make them specially fitted for 
agricultural pursuits, but render them unsuitable for 
occupations demanding a high measure of concentra- 
tion and of business capacity. Their childlikeness 
and lack of knowledge render them incapable of 
initiative and of independent judgment, and conse- 
quently they are accustomed to communal co-operation 
and to state assistance and control. In this mental 
condition the freedom they will now enj oy will doubt- 
less cause them to make communal production and 
trading still more comprehensive. Further, with the 



INTRODUCTION xvii. 

disappearance of the nobles they will probably demand 
a greater measure of assistance from the State in 
obtaining the additional machinery they will need to 
expand their productions, as well as in the work of 
transporting their produce at home and abroad. The 
economic system of Russia for some time to come must 
necessarily be a combination of Communism and of 
State Socialism. 

In Germany and Austria also the environment in 
which the great mass of the people have hitherto been 
placed renders them quite incapable of thinking for 
themselves, and inasmuch as everyone has so long 
been accustomed to rely upon the State in all matters, 
the German as well as the other peoples of the two 
countries, even when they completely control and are 
responsible for their own governments, will still necess- 
arily continue to need the help of the State. Hence, 
for a time at any rate, any government that may be 
set up, whether it be a limited monarchy, or as seems 
most probable, a republic, will be compelled by force 
of circumstances to pursue a policy of State Socialism 
of the purest description. 

On the other hand the French people are accustomed 
to individual thought and initiative, and desire great 
individual freedom, not only in agriculture but in 
industry. Consequently, there is a general disposition 
shown by workmen to adopt co-operative methods of 
manufacture rather than to continue to be employed 
by individual capitalists. This disposition is due to 
their desire for a voice in controlling their own lives, 
as well as to their wish to participate in greater measure 
in the profits of industry. The character of the French 
people thus points to an individualistic economic policy, 



xviii. INTRODUCTION 

in so far as it is of advantage to the average citizen, and 
to what is known as SyndicaHsm, or Guild Socialism, 
when industries must be carried on by large numbers of 
persons working in co-operation. 

In brief, whereas in Russia, Germany and Austria, 
the people will gain a much larger measure of freedom 
by setting up democratic governments and imposing 
upon them still more comprehensive duties than were 
performed, even by the autocratic governments they 
will supersede, in France a greater measure of indi- 
vidual responsibility for the great mass of the people 
in the conduct of industry, will carry the nation along 
the path leading to individual liberty. 

In the United States, the workers generally are in 
favour of individualistic effort, but are opposed to the 
control of industries by a few persons of great wealth 
and of great power. Therefore, in America as in 
France, the character of the nation and the course of 
events seem to lead to the control of industry by the 
workers. Hitherto labour, both manual and pro- 
fessional, has been hired by capital at the remunera- 
tive rates current in that country. In the future it is 
likely that manual labour, allied with professional skill, 
will hire capital at the remunerative rates which capital 
in such a wealthy country as America will always be 
able to command. The application of this principle 
is already very far advanced in such undertakings as 
railways, where public opinion is averse to the payment 
of higher dividends than needed to permit new capital 
to be raised as required, where policy is controlled by the 
staff, and where the rate of remuneration to the 
employees is as high as the public considers just or is 
willing to approve. 



INTRODUCTION xix. 

The British people are essentially independent and 
individualistic, they hate authority and dislike control, 
unless self-created and self-imposed. Their most 
pronounced characteristic, and their greatest asset, is a 
fund of what is generally described as common sense 
and a sense of proportion, and they prefer to judge each 
question on its merits, when they are compelled by force 
of circumstances to come to a decision, rather than 
allow their decision to be governed by theoretical 
considerations alone. When they have the choice of 
two policies they usually follow the one which promises 
to give the best results, however hazardous it may be, 
and are quick to follow a leader who shows boldness 
and enterprise, combined with practical wisdom. 
Their love of adventure has not only made them a 
sea-faring nation but has led them to take chances of 
all kinds. Hence they have been for many years and 
still are the most enterprising of all the nations. The 
activities of their bankers, manufacturers, merchants, 
shipowners, under-writers, contractors and producers 
generally, are world-wide, while their investors are 
interested in almost every great enterprise wherever 
it may be situated, from the North to the South Pole. 

In the work which these few notes will introduce to 
the reader Mr. Robinson gives a valuable, an instruc- 
tive and an impartial survey of the trend of economic 
thought and of economic policy in modern times, and 
in his concluding chapters he deals faithfully with the 
questions of Socialism, Syndicalism or Guild Socialism 
and Individualism. These chapters necessarily reflect 
anxiety as to the economic policy which this country 
may pursue when the spirit of democracy is as prevalent 
and as highly developed as it is likely to be after the war. 



XX. INTRODUCTION 

Analysis of the British character and disposition, 
however, should dispel any uneasiness or anxiety as to 
the course which the British nation will take when peace 
is restored. The qualities that have made the British 
nation what it is have not been destroyed by the war, 
rather have they become strengthened. To bear 
successfully and easily the strain of a great war in the 
manner the British people have borne it is the result 
not of the war but of the character the people 
possessed prior to the war and of the policy they have 
pursued during the last two generations, in which 
individual freedom, independence and responsibility 
have grown steadily greater. That democracy will be 
freer after the war is the strongest possible testimony 
to the soundness of the policy which democracy has 
pursued hitherto. The war has merely brought 
British democracy nearer the goal towards which it 
has been walking, with more or less consistency, for 
a very long time. 

What, then, is likely to be the economic policy of this 
country after the war, when democracy will have much 
greater power than it has had hitherto ? 

It is evident that democratic policy after the war 
will not differ in essentials from democratic policy prior 
to the war. It will be bolder, bigger and more con- 
fident, but much the same in essentials. For many 
years British democracy has endorsed the principle 
that the State should perform those functions it is 
specially fitted to perform, and which other organisa- 
tions could not accomplish or not accomplish so well. 
The State includes, of course, both the national and 
local authorities. The community in its corporate 
capacity has undertaken the work of maintaining the 



INTRODUCTION xxi. 

roads, of collecting and delivering letters, of producing 
and distributing gas, water and electricity, of pro- 
viding a telephone service, of educating the children, 
and of performing other duties which it could perform 
with great advantage. After the war the State will 
probably extend its activities to railway transporta- 
tion, which can be rendered much more useful and of 
much greater value by unification, to insurance of the 
working classes against all the misfortunes to which 
they are subjected, including unemployment assur- 
ance for all, as well as widowhood insurance, and 
to a number of other things which urgently need 
to be undertaken by the State. But these things 
will not be undertaken until the British people are 
convinced that such a course is in the general interest 
and the proposal to undertake them does not warrant 
uneasiness. 

Again, it is probable that the principle of co-opera- 
tion, which is really what is meant by Syndicalism and 
Guild Socialism, when the latter are shorn of their 
sinister attributes, will be extended from distribution, 
insurance, clubs and other ventures to production. 

If the extension of co-operation to production is 
successful as under present circumstances it is likely to 
be, the benefit to the nation will be very great, for then 
the workers will be their own masters, and the con- 
stantly arising friction between capital and labour will 
for ever disappear. But it is obvious that co-operative 
production can be introduced into very few industries, 
at any rate until a great deal of experience is gained of 
its working. Coal mining seems to be the one industry 
adapted to the new departure where the workers are 
anxious to try the experiment. Provided that the 



xxii. INTRODUCTION 

miners secure the capital to take over the mines, and 
do not attempt to obtain them by violence, nothing but 
good could arise from the mines passing into the 
possession of the workers themselves, who not only 
labour under such unfavourable conditions, but who 
daily expose their lives to unknown dangers in pursuing 
their calling. Of course, even if the miners wished to 
confiscate the mines, the British people would not 
sanction confiscation, as such a course is entirely 
contrary to the national character. The British people 
have never failed to pay handsomely for any property 
they desired to acquire for national or other purposes, 
and there is less likelihood than ever of their doing so 
in future. 

And after the industries which the State or companies 
of workmen are fitted to undertake have been acquired, 
there will still be ample room for all the private enter- 
prise that is available, especially having regard to the 
probability that the greater freedom of democracy will 
cause a still stronger effort to be made to raise the 
universal standard of comfort, that consequently 
demand will increase, and that production will be 
correspondingly stimulated. 

Thus the policy of the British nation in the future, 
as in the past, is likely to be a judicious combination of 
individualism, co-operation and socialism, with the 
probability that the effect of the combination, in view 
of the greater spirit of freedom and the greater know- 
ledge which all the world will enjoy, will be a much 
greater volume of production, accompanied by a much 
higher level of consumption. 

In brief the supremacy of democracy which will 
result from the destruction of autocratic militarism 



INTRODUCTION xxiii 

will not only render the peace of the world much more 
secure than hitherto, but as soon as the period of 
transition from war to peace, from autocracy to 
democracy, is passed through, it will bring to the world a 
degree of well-being that cannot be attained unless 
men and women labour in an atmosphere of liberty, 
with the energy of hope and the promptings of 
affection. 

George Paish. 

yth November, 19 18. 



Chapter I 
THE FALLACY OF MIDAS 

(i.) 

Once long ago there lived in Asia Minor, a king called 
Midas, who formed an economic theory, and this 
since he was a special favourite of the Immortals he was 
permitted to carry into practice. Like many other 
economic theories, it might have looked well enough 
on paper ; but in execution it was a terrible fiasco. 
According to the definition of wealth which this 
ingenious monarch had proposed, it was gold alone 
which counted, and according to that definition he 
saw himself a made man. For he prayed that 
everything might turn to gold under his touch 
and his prayer being granted, he was well on the way 
to become a millionaire (for a quite insignificant ex- 
penditure of trouble), when to his dismay he found 
himself on the border of starvation. Whatever he 
drank, were it wine or water, turned into liquid 
gold as it passed his lips ; if he tried to eat his teeth 
grated upon an uncompromising lump of metal. There 
was but one escape from his dilemma, and that was 
by a reversal of the god's decree ; and had it not 
been for the generosity of Olympus he would have 
died from want like any pauper. His whole hypothesis 
concerning wealth had broken down. 

Mankind is slow to learn whether by precept or 
example ; so the moral of Midas' misfortune was 
largely lost upon the world. Centuries passed, 
and in the course of history, his blunder was re- 
peated, this time in a more western land, and not 



8 NEW FALLACIES OF MIDAS 

by a king alone, but by a king's whole people. When 
the voyages of Columbus and his successors revealed 
to their countrymen the fabulous resources of 
the new continent, the lust of gold caught them 
in its grip, and in the years that followed the more 
adventurous spirits among them were busy shipping 
gold across the sea to the treasuries of Spain. 
If gold was a true index of national prosperity then 
Spain was prosperous ; her future semed assured. 
Yet at this very moment her decline set in ; and not 
all her hoarded wealth was sufficient to arrest the down- 
ward movement. Were the England of to-morrow 
to lose her maritime ascendency, or were she by political 
blundering to alienate her great dominions, she would 
yet retain some measure of her prosperity and im- 
portance so long as her mines, her cotton mills and her 
hard ware factories remained intact. Spain had no 
such resources on which to draw ; and swiftly enough 
she sank from her high estate into penurious degrada- 
tion. She had built her hopes and spent her energies 
upon a form of wealth which cannot feed the hungry 
mouth, or clothe the naked body, a form of wealth 
which, of its very nature, can never make a people 
strong or wise or happy. 

We to-day are little likely to fall victims to the 
illusion which cheated Midas and ruined Spain. During 
these last years of war we have learnt to dispense 
with a gold currency ; our daily business has been 
conducted with the aid of flimsy fragments of in- 
diiferent paper ; and the veriest fool is now aware 
that gold is no more than a convenient medium of 
exchange. We may believe financiers when they tell 
us that gold provides a "permanent standard of values"; 
but we trouble our heads very little about such things 
so long as the Government printing press is working 
and public confidence is sustained. The figures of 
great loans have taught us to think in ciphers and not 



THE FALLACY OF MIDAS 9 

in coins ; we begin to realise something of the elements 
of world finance, and the mysterious powers of credit. 
Nobody now would gauge our national prosperity by 
counting the bullion stored up in the national banks. 
And if we cannot define precisely what we mean by 
wealth, we can at least quote trade statistics, and 
strike a balance between the total values of exported 
and imported goods. Yet sooner or later (if we are 
to think at all about such things), we must face the 
question " What is wealth ? " and answer it if we can. 
For the real cause of Midas' fiasco and Spain's disaster 
lay not so much in their hurry to be rich, as in the 
mistaken answer which they gave to this perplexing 
question. We all need wealth and we spend the 
greater part of our waking hours in the endeavour 
to obtain it, but what precisely is this wealth we are 
seeking we seldom trouble to enquire ; and most of us 
would find it hard indeed to give a satisfactory answer. 
Midas said gold ; but repented at leisure. Others 
with higher wisdom might hazard a country house, 
a shooting moor, a well-filled stable ; but that would 
hardly meet the notions of a bibliophile or a native 
from Honolulu. Tastes differ ; and any attempt to 
pin all mankind to some such arbitrary choice, would 
leave half the world as miserable as Midas. So we 
had best seek to frame no concrete definition or 
we shall be caught in some fallacy every whit as 
blundering as his. 

None the less, whatever wealth may be, we are 
all agreed that wealth is what we need ; and so, I 
suppose, it would be true to say that wealth is that 
which satisfies our needs. Whatever ministers to our 
bodies' wants, gives pleasure to our senses, food for 
our minds, or comfort in our homes, all this is wealth ; 
not the outward signs of material well-being only, 
food and drink, houses and furniture, finery and 
trinkets : but no less the view of a mountain side seen 



10 NEW I<ALLACIES OF MIDAS 

from our windows, a sermon preached to us in church; 
a song written to beguile our idle moments. The 
nature of wealth varies from day to day, with the 
variation of our tastes ; should ladies of fashion 
discover next season some unexpected elegance in 
mole skin muffs, the breeding of moles would become 
a profitable business, and a mole-ridden meadow a 
treasure rather than a nuisance. In short, anything 
which men or women find useful and alluring, is a part 
of wealth, and even though their desire for a thing 
seems foolish or pernicious that is no reason for 
ruling it off the list. If clothes are wealth because 
they keep us warm and dry. Dreadnoughts and 
howitzers are wealth also, because they protect us 
from worse things than wind and rain. 



(ii.) 

Nor, when we come to consider the agents and 
sources of our wealth, shall we omit from the count 
those many things which in themselves are detestable, 
or at least unpleasant, and which yet contribute in 
some indirect manner to the satisfaction of our 
wants ; such things for instance as mines for coal or 
metal, goods trains, paper bags and the manufacture 
of chemical manures. Nobody would desire any of 
these for their own sakes ; but if I am to enjoy a 
plate of porridge, every one of them will play its part, 
great or small, in providing that trifling satisfaction. 
Most important and most obvious of all is the contri- 
bution of the soil itself. The earth is the original 
purveyor of all our wealth ; and when we consider the 
crops she grows, the animals she feeds, the metals and 
chemicals which she contains, it is clear how little 
there. is which we possess or enjoy but derives its 
origin from her. 



THE FALLACY OF MIDAS ii 

But for all these things, before we can enjoy them, 
Nature demands a price, a toll ; and this too (though 
here perhaps the gods were equally to blame) Midas 
had forgotten. The earth is a niggard minister ; 
she yields us what we ask, but ever since Adam and 
Eve walked out of Eden, she has yielded it only on 
one strict condition ; we must work for it. We must 
sow, reap, dig, build, and win our livelihood gener- 
ally by honest sweat. Metal a thousand feet below 
earth's surface is no more wealth to us than the lost 
mines of Solomon. It must be fetched from its hiding- 
place, molten in a furnace, beaten into shape ; not till 
then will it be valuable to man. As without the 
sculptor's handiwork the marble block will be no 
statue, so without labour the earth's resources cannot 
become wealth. Man and nature have entered into 
partnership to supply man's wants. Sometimes there 
are cases when one or the other seems sleeping-partner 
in the business. We may have blackberries, or (in 
India) bananas, as a free gift ; or a man sings a song, 
acts a play or delivers a lecture, and he may boast to 
nature that he has satisfied his fellows and yet done 
without her. Nevertheless, in however small degree, 
the partnership still holds valid. The blackberry 
must at least be picked ; the singer or lecturer must 
use the voice which nature has given him. Nature's 
part, in fine, we cannot cancel ; we can only endeavour 
to control her. If rains fail or coal mines are ex- 
hausted, we must accept the circumstance. We are 
answerable for our part and for that only ; we endea- 
vour to extract from nature what we can, and if 
at this advanced stage of the world's history the 
result falls short of our requirements, it is for us to say 
whether we have played our part foolishly or wisely. 



, , Chapter II 

WORK 

(i-) 

Man then accepts work first of all as a necessity of 
his existence, not as a moral duty. This truth has 
often been most strangely and wilfully forgotten. 
There are many well-meaning persons going about 
the world whose chief anxiety is to see that everyone 
else is doing something. When trade is slack and 
many hands are idle, those people talk about the 
** right to work " ; employment, they say, must some- 
how be provided ; and they will push forward schemes 
for the building of roads which nobody will ever use, 
or the draining of fens which no farmer will ever till. 
Such folk are always much scandalised at the miner 
who works but four days out of seven ; not because 
they want more coal, but because it gives them pain to 
see a man thus unoccupied. They are scandalised 
again when the engineers go on strike for shorter hours 
though they themselves have never worked a 
twelve-hour day in their life. At one time they may 
be heard defending the indulgence of some private 
luxury as being " good for trade, " because, that is, it 
it gives somebody else a job to do ; at another they are 
consoled for the accident of a broken window because 
it gives employment to the plumber, as through the 
plumber, good man, would not have been just as well 
satisfied had they spared the pane and sent himhalf- 
a crown by post. But that would never do ; these 
good folk would feel there was a something lacking ; 
they wished to see the man busy with his foot rule and 

12 



WORK 



13 



daubing the putty with his thumbs. They have no 
precise reason to give for wishing it ; they do not say 
that it is good for a man to be active; for in that case, 
they would first take the trouble to enquire how the 
man's leisure hours are spent. But that at any rate is 
not their argument. The idea that has captured their 
minds is the far more venturesome hypothesis ; that 
the plumber wants or should want to mend windows, 
the miner to dig coal, and the engineer to manufacture 
machinery, for the work's own sake, which is a very 
different matter. 

A Chinese writer tells the story of a tactful mandarin 
who at the close of a long and honourable career, 
retired to the borders of a lake, where he spent the re- 
mainder of his days in angling for fish. For so skilled 
a man his sport seemed singularly unproductive, 
till one fine day it was discovered that he used 
no hook at all upon his line ; for it was not, it seems, 
his intention to catch fish. In China this may pass for 
the wisdom of a philosopher ; but we should call it the 
act of a fool. Here in Europe there is a strong presump- 
tion that if men angle, they angle to catch fish, and upon 
the same sound principle, they work, if they work at all, 
in the expectation of reaping some return. Labour, in 
other words, is a means to some end beyond itself. First 
and foremost men work not because they want to, but 
because they want something which work alone can 
give. 

Yet for all this, many men love their work ; it is some- 
thing more than habit or sense of duty which keeps 
them at their desk or at their bench long after the 
actual necessity for work is gone. The truth is that 
the love of activity, the desire to be up and doing 
is far stronger in our nature than the love of ease and 
leisure. Between the alternatives of action and In- 
action few would hesitate in their choice ; least of all 
those who have experienced the tedium of an idle 



14 NEW FALLACIES OF MIDAS 

life. In a recent book, entitled " the Great Society," 
Mr. Graham Wallas has recorded the various answers 
given by a number of girls and women to whom was put 
the question, whether work brought them happiness. 
Almost without exception they asserted that it did, 
and the reason in every case was laid upon the misery 
of a purposeless existence. " It is so lonesome at 
home." " At work I am always happy ; " *' it leaves 
me no time to think ; " or " it is nice to feel you are 
some use." All their answers were in the same strain. 
Yet by a curious contrast the verdict of the men to 
whom a similar question had been put, was equally 
decisive, but in the opposite direction. " Questioned 
with regard to pleasure in work, engineers say it is 
all toil. They admit there is a certain pleasure in 
a job well done ; but they say bad conditions knock 
the pleasure out. Coal miners generally say the work 
is all toil, but one man said he would sooner be at work 
than idle ; another that he can take pleasure in the 
work for half a day when he knows he is going to have 
a half-holiday. A third said that there is a certain pleas- 
ure in digging out coal, when you have a good place ; 
but that pleasure is just in the expectation of making 
a good wage. Factory workers {i.e. , textile, bootmaking, 
etc.) agreed that work is all toil." There is only one 
exception, " Ashby, our agricultural labourer, is very 
emphatic with regard to the pleasure to be obtained 
from agricultural work." At first sight the contrast 
may appear puzzling ; but the explanation is not, I 
fancy, far to seek. The men spoke as never having 
known what it was to lead an idle life. The cause 
of their dissatisfaction lay, not in a dislike of work, 
but in a distaste for the particular kinds of work which 
circumstances compelled them to perform. A doctor, 
a scientist, or a teacher would have a different tale 
to tell. These do win happiness through their work, 
because they find in it a means of self-expression. 



WORK 15 

There is a vital energy in man which craves an outlet, 
ideas, emotions, inspirations, which demand to be 
translated into action ; and we must believe (unless 
we are to despair of human nature) that every man, 
however indolent or stupid, has some hidden talent, 
some innate capacity which it gives him pleasure to 
employ. One, may be, is ready with his hands, and 
longs to gratify the instincts of a craftsman ; another 
has a taste for the sea, and delights in the navigation 
of a boat ; a third loves flowers and finds happiness 
in growing them. To these their several occupations 
echo in some real sense the inner workings of their 
personality. But the trouble is not so much that 
the wrong men find their way into the wrong pro- 
fessions, but rather that the great majority of trades 
afford men no such opportunity of realising their true 
selves. Most of the talk about the ''blessedness" 
of manual labour is sheer cant ; if those who use that 
phrase were to spend twelve months in digging coal, 
or laying bricks, or ploughing up the soil, they would 
soon realise that in such tasks of unrelieved monotony 
there is small satisfaction to the soul of man. Ten 
hours of hoeing in a field of turnips may be good moral 
discipline, but discipline implies preparation for some 
further and higher purpose. Soldiers are drilled 
that they may keep their ranks when the day of battle 
comes ; but the realisation of the soldier's self comes 
not in the drill, but in the victory. So the drudgery 
which turns human beings into unintelligent machines, 
is not what human beings themselves desire, or should 
desire. The Greeks, who understood life better perhaps 
than most modern people, were quite clear upon the 
point. Aristotle held that no man had attained the 
full measure of his human birth-right who spent three- 
quarters of his day and all his energies upon purely 
manual labour. In the past the life-work of more 
than half the world's inhabitants has been as soulless 



i6 NEW FALLACIES OF MIDAS 

as the labour of a well-kept horse. Even to-day how 
much of human toil is still mere drudgery, death to 
the spirit and weariness to the flesh. Man has hitherto 
endured the yoke, not because he loves such toil, 
but because he is under compulsion to secure his 
daily bread. And therefore throughout the ages, it 
has been his constant effort, as it still is, to mitigate 
the severity of his necessary toil. 



(ii.) 

Man differs from the rest of the members of the 
animal kingdom in this, that while their destiny is 
shaped by something other than their individual choice, 
he, being master of his fate, discerns the alternative 
courses which lie before him and chooses. 

Some animals are by nature idle ; the cow does 
nothing for its fodder : but lives by browsing. Others, 
like the bee, work with a restless industry which kills 
them in a month. The two types are poles asunder, 
with not a point in common ; yet here is a man setting 
out with a fine audacity to emulate them both. Want 
heads him every way ; to satisfy his needs he must 
toil like the bee ; but then toil is painful; he is in 
no hurry to be dead ; there is much to be said for the 
cow's life after all. What a cruel dilemma lay thus 
before primitive man ! Fortunately he was muddle- 
headed from the outset ; and he never sat down to 
think it out. If he had, he would be sitting there still, 
and where would be the solution ? But man, little 
knowing how or why, works out his destiny at the 
last. .^ 

Consider the life, " nasty, brutish and short," which 
he led in the dark and painful ages of his infancy, 
stalking his quarry with a brittle flint, hoeing up the 
sods for his miserable corn crop with the beak of a 



WORK _ 17 

broken bough, grinding the grain between two boulders, 
and then, as like as not, going hungry to bed, because 
the rain put out his fire. The wonder is that he should 
have survived at all. For to make matters worse 
he bred and multiplied exceedingly, and just when it 
seemed to call for a miracle to provide food for all the 
mouths, the miracle actually did happen. For there 
broke on his dull brain the magic of invention. Some 
bright spirit, — Tubal Cain is the name which legend 
gave him — was one day discovered turning up his 
fallow with a preposterous implement to which he had 
actually harnessed the elder and stronger members 
of his family. I have little doubt that his neighbours 
called him ugly names, said that this was an improper 
use of children, and that it was worse than useless to 
plough the soil so deep, and generally prophesied 
disaster. None the less his crop succeeded ; he had 
broken four acres to his neighbour's two, and ear for 
ear his yield was twice as heavy. After that inventions 
followed thick and fast ; first came wheeled carts, 
saving an infinity of trouble ; then boats for the 
navigation of seas and rivers ; more wonderful still 
machines which would turn yarn into cloth with twenty 
times the speed of the most skilful hand weaver. By 
the time all this was accomplished, it might be thought 
that man would have been contented with his lot ; 
for food of a sort was now plentiful ; his labour was 
lighter ; and the animals had long ere this been made 
his slaves and upon them were foisted the least attrac- 
tive of his tasks ; he might well let invention be ; but 
not a bit of it ; he went one better and proceeded to 
harness, as they say, the elements. Fire, water, 
electricity (we have reached our grandfathers' time 
by now) were each in turn summoned in to p ay ; 
and he can boast to-day of engines and machineries 
so powerful and efficient that one man at a lever 
can perform the function of ten, twenty, or a hundred 



i8 NEW FALLACIES OF MIDAS 

hands ; from which it may be seen that though 
thinking may not add one cubit to our stature, it can 
multiply our food and drink a thousand fold. 

Thus man by the use of his native wit has succeeded 
beyond belief ; mechanical invention and scientific 
study of the earth's resources had performed a miracle 
of progress ; yet even this would have been impossible 
but for one other and most important principle of 
method. Organisation is the main-spring of all success. 
Just as victories do not fall to a rabble, and a nation 
at war must organise, so man might exhaust all his 
ingenuity and lay his schemes never so wisely, but 
hardly a step of progress could he make without the 
disciplined co-operation of his fellows. 

There was once a time (though it is so long ago that 
I daresay historians would deny it ; ) when every man 
was jack of all trades ; he raised his own corn, baked 
his own bread, manufactured his own implements, and 
was, in a word, his own butcher and baker and candle- 
stick maker, as well as his own police constable. We 
may be sure that he was an indifferent performer 
at such a variety of jobs ; and the mere -time he wasted 
in passing from one to the other was lamentable. But 
it was not so long before he discovered a better way. 
Were he himself to give his whole day to raising of 
the corn, while another man's business was to grind 
it, a third to bake it into loaves, and a forth to distribute 
these among the neighbours, what an ecomony of time 
and what an increase of skill would result all round. 
So each individual undertook to drive a separate trade, 
and specialisation became the order of the day. Ever 
since then this principle has developed more and more, 
until to-day even the simplest article of use is the work 
not of a single craftsman but of many. Half-a-score 
of processes for example, have gone to the making of 
this book ; one man set up the type, a second put 
it through the press, a third prepared the cover-lids, a 



WORK 19 

fourth pasted them together at the back, a fifth 
stamped the title, a sixth; sheared the leaves ; — and, 
in short, all that Caxton and his apprentice performed 
with two pairs of hands, now engages an army of 
workers. The result is that where the Westminster 
Press turned out a single book the modern publishing 
house can turn out a thousand ; and publication is 
so cheap that the deluge of printed matter is nothing 
short of a general nuisance. It is the same with every 
trade. Specialised labour is an art we have learned 
perhaps only too well, but though the clothes, pictures, 
furniture, crockery and wall-papers which our great 
factories shower upon us, are inartistic sorry stuff, 
they are at least both plentiful and cheap. 

It is a far cry from the ample conveniences of modern 
life back to the naked destitution of our forefathers. 
Thousands of years have passed since they faced the 
grim alternative of grinding drudgery or sure starvation. 
To say that their dilemma has been solved is perhaps 
to say too much. The masses are still discontented 
with their lot, and heaven knows there is little remission 
from their toil. But there are those who claim that the 
solution lies already in our power, did we but care to 
grasp it. They tell us that we have only to abolish 
property, tax the land, nationalise the railways, 
adopt a tariff, or apply once and for all some grand 
heroic remedy and the millenium will be here to-morrow. 
I doubt if it is as near as that, or whether, when it 
comes, it will be by such means as these ; but it is 
something surely that such a hope is even whispered. 
We may not yet have reached the goal ; but let us at 
least recognise what a distance we have travelled. 

Man's first aim, as we said, was the satisfaction of his 
wants. How far has he achieved that ? He began 
life in a beggarly fashion, scarcely able to keep body 
and soul together. Now, even the poorest are able to 
feed, house and clothe themselves and find, perhaps. 



20 NEW FALLACIES OF MIDAS 

a trifle over to send the children to the picture palace. 
The greatest change of all has come during the last 
hundred years : and though there is no need here to 
institute a statistical comparison, or estimate the scale 
of wages, the price of comforts, or the purchasing 
power of money in 1817 and 1917, yet it is worth while 
to set down a story told of a country labourer just a 
century ago. When he was already an old man, he 
was asked, as a point of interest, to recall what had been 
the most memorable treat in his long, but uneventful 
life. His reply must have come as a shock even in 
those days ; else it would hardly have been recorded. 
He could recollect, he said, having enjoyed no greater 
pleasure, taking all in all, than when by a rich neigh- 
bour's bounty he made a meal off a cold rice pudding. 
Such an answer is simply unthinkable to-day. 

Man's second aim or desire, as we have seen, was to 
reduce the severity of his daily toil. How far he has 
succeeded, is difficult to compute, the conditions of 
industry have so changed and there is so wide a 
difference between the labour of the mediaeval peasant, 
and the labour of the modern factory hand. There 
are still no doubt many trades which require a great 
out-put of physical strength. Nevertheless, upon the 
whole, the advent of machinery has in a very high 
degree lightened the burden of labourers. The best 
proof of this lies in the fact that during the war women 
have been able to take men's places in the factories 
and (what is more) have maintained the output of 
production at a rate but slightly lower than in preceding 
years.* Labour to-day demands perhaps more con- 
centrated energy than in the past ; yet that concen- 
tration is itself a step nearer the goal. It may be 
that the primitive man was a bad time-keeper, and I 
daresay that the Anglo Saxon labourer idled behind 
his master's back, but I wonder what either of them 

* In many cases even higher. 



WORK 21 

would have thought had he heard men seriously pro- 
posing the introduction of an eight hour day. 

The world is not perfect yet ; many work too hard 
and go too short ; but the great change has begun ; 
and labour to-day claims shorter hours, entails less 
physical exhaustion, yet at the same time is infinitely 
more productive than the wisest prophet could ever 
have foretold. 

Yet it is not to be thought that the march of civilisa- 
tion is a sort of Rake's progress, and that as life 
becomes easier and pleasanter for man, he must needs 
fall into careless, idle ways ; far otherwise. His vigour 
is not diminished by the increase of his powers. The 
better trained his mind, the greater his capacity for 
work ; and as work becomes more complex, it calls 
for a more concentrated and effective energy. The 
performance of modern music (to take one striking 
instance) demands an exercise of mind and body, 
such as no mediaeval minstrel ever dreamt of. The 
modern craftsman may work short hours ; but during 
those hours his whole energy and attention are set upon 
his task, nor is even his leisure wasted after the manner 
of the agricultural labourer, whose favourite relaxation 
is a complete vacancy of mind. The world, in short, 
will be found more alert to-day, more ambitious and 
(if you will) more restless than ever it was before. 
Our life is crowded with incident and variety of 
occupation ; and if reformers clamour for a reduction 
of working hours, it is not a sign that the race has 
become lethargic or enfeebled. Rather it points to 
a fuller and higher conception of life's purpose, and 
reminds us that there exist other activities than the 
winning of daily bread. For, in a sense, all activity 
is work. The reading of a book which kindles ideas 
or informs the mind is work ; talk which sets the brain 
thinking is a more worthy use of time than hoeing 
turnips. So what we need to consider is not how much 



32 NEW FALLACIES OF MIDAS 

or how little work we ought to do, but the quality of 
what is done. And above all, let us remember that it 
is the motive that determines what the quality will 
be. Even the highest forms of work may seem mere 
drudgery when the right spirit is wanting : but the 
meanest task performed for an ideal is changed from a 
burdensome necessity and becomes an inspiration 
and a joy. 

But, though I suppose every thinker from Aristotle 
downward has agreed in ranking the mental activities 
as higher and more desirable than activities of the body, 
yet we must not fall into the error of depreciating 
physical labour. It is not necessary merely, but 
wholesome too. We consider a man who never uses 
his brain, to be little better than a brute ; but the 
opposite extreme is equally undesirable ; and there 
is something almost inhuman about the man who 
forgets the existence of his body. The intellectual and 
sedentary life requires some antidote. It matters but 
little wherein that antidote is found ; whether in 
sport and active recreation, in the exercise of art and 
craftmanship, or even, (where Ruskin once seriously 
set out to find it) in the more strenuous exercise of 
stone-breaking. What seems of more importance is 
that leisure should mean for us all not activity merely, 
but activity in some sense complementary to our pro- 
fessional work. Even so in this dualism of occupation 
a genuine difficulty seems to arise. I mean that for the 
majority of men to-day life is, as it were, divided into 
two compartments, the time during which they work 
with an object, and the time which they waste for 
want of one. So they come to regard leisure as a mere 
cessation of activity, or at best as an activity that has 
no purpose. If, as is probable, the future development 
of civilisation makes bread-winning more easy, and 
reduces still further our daily task of necessary work, 
the problem will be even more acute. The time may 



WORK 23 

come when a six hour working day will be the rule ; and 
then we shall be even more at a loss to utilise a leisure 
thus enlarged. A real need will be felt for a motive 
which will give a fresh unity to life and enable 
a man to feel that all his activities are directed 
to one purpose and not two. That motive cannot 
be a merely sefish motive ; for the longer are the 
hours of leisure, the more inadequate will mere 
amusement be to fill them. So men will naturally be 
driven to devote more of their spare time to acts of 
useful service. Each in his own way will contribute 
something towards making life more pleasant, more 
enlightened and more beautiful for his fellowmen ; 
and in so doing he will find more contentment than in 
his wasted hours.* And, since this motive of service is 
also the motive by which all true and honest work is 
inspired, we shall find in it the very unity of purpose 
which we have sought. Nor is it strange that such an 
ideal alone should satisfy ; for alone it is able to give 
to the scattered incidents of life a clear connected 
meaning. It is not like that spurious religion which 
begins at the Church door and is forgotten from Monday 
morning till Saturday night. It embraces the whole of 
man's activities, and passes with him from the toil 
and sweat of the workshop into the pastimes and 
amenities of life. 



* If this statement seems to strike too high a moral note, it is only 
necessary to refer to the Boy Scout movement for support of it. Boys 
are happier doing a '' good turn " to a neighbour or improving the 
eflficiency of the troop than they ever were when idling at street-corners 
or attending the local cinema. 



CHAPTER III 

CAPITAL 

Living as we do in an age which the triumphs of human 
skill and ingenuity seems to have set upon a plane 
immeasurably higher than all the civilisations of the 
past, there is little wonder that the modern world 
has begun to have a fine conceit of its own wisdom. 
Seeing Science thus miraculously exploited, Nature 
already mastered and pressed into our service, a 
prosperity more widely extended and a civilisation 
more progressive than ever was before, we conclude 
that we are a little better, or a least a good deal wiser 
than the fathers who begat us. And so, like the 
thankless heirs of some great inheritance we over-look 
or underrate the debt which we owe to the patient toil 
of the scientists, chemists, and mechanical inventors 
of the previous century and even of those forgotten 
pioneers who first devised the axe-head and the plough. 
When we boast of the triumphs of modern progress 
and plume ourselves on the giant strides we are making, 
we should in very justice recollect that it is often 
the first faltering steps which count the most. 

But it is not only to the more brilliant spirits of 
discovery and invention that we are debtors. The 
great host of unnamed workers who tilled our fields 
and set up our homes, dug our mines and bridged 
our rivers, have also a claim upon our gratitude. It is 
to them we owe, in part at least, the vast hoard of 
accumulated wealth which every generation be- 
queathed to its successor. They, like thrifty parents, 
built up the capital, of which we, their sons and heirs, 
enjoy the interest. 

24 



CAPITAL 25 

Capital is a word with a falsely financial sound about 
it. Too often we speak of it, as though it were a 
matter of bank-notes or dollars or pounds sterling, a 
mere parcel of stocks and shares, or a deposit at the 
bank. But these are only the tokens and arithmetical 
symbols of capital. For capital itself may take a 
thousand or ten thousand forms. 

The short parable which follows will make my 
meaning clear. 

Not many years ago, Mr. Pennywise, the well- 
known print collector, who then lived in a villa at 
Ealing, and worked in the city as a clerk, having saved 
a couple of hundred pounds, invested the whole of 
that sum in Mexican Railways — a transaction calcu- 
lated, as he thought, to bring in due course a welcome 
addition to his income. He flattered himself vastly 
on this wise disposition of his savings and entertained 
a secret contempt for an improvident neighbour 
who had expended a similar sum upon the purchase 
of a car. The railway dividends, when they arrived, 
exactly covered the cost of a second class season ticket 
to town where his business then took him every week- 
day of the six. His neighbour on the other hand, who 
had been previously accustomed to travel with him in a 
third-class carriage, now preferred to make the journey 
in a car. Both men were well-satisfied with this 
change in their daily habits, and with the use to which 
their capital was put, but as events proved the owner 
of the car still continued to enjoy the luxury of his 
morning and evening drive long after the calamitous 
outbreak of civil war in Mexico and the subsequent 
collapse of Mexican Railroad stock. During the next 
year and for many years which followed, the Mexican 
investment paid no dividend at all, and this disaster 
so changed the financial preconceptions of Mr. Penny- 
wise that he resolved to employ his future savings 
in the purchase of old prints, in which, as it chanced, 



26 NEW FALLACIES OF MIDAS 

he had an excellent taste, and from which he derived 
a satisfaction that was not merely highly genteel, 
but perfectly secure against the accidents of revolution 
or finance. 

Thus do men employ their capital, some this way 
and some that. In essence, capital never consists 
in money, but in such things as railroads, motor-cars 
and prints. When Mr. Pennywise lost his dividend, 
each morning still brought his neighbour a not in- 
adequate return for his investment, in his daily ride 
to town ; and long after the car was on the dust heap, 
Mr. Pennywise continued to enjoy the contemplation 
of his prints. And last year, when his collection was 
sold at Christie's the proceeds of the sale established 
his widow and sorrowing family in a secure and com- 
fortable fortune. Capital is wealth saved, and not 
consumed wealth : Wealth consumed gives satisfaction 
to our wants, but wealth saved is the means to the pro- 
duction of more wealth. * Let us take an illustration 
more obvious and simple than the cases hitherto 
disscussed. The first rude axe made by palaeolithic 
man was capital to him. Its manufacture arose, 
as we may guess, from his having more corn than he 
could eat. The harvest was for once unusually pro- 
ductive, and he had enough to last him for two suc- 
cessive years. So when seed time came round, it did not 

* The purchase of a motor-car might at first sight be reckoned as 
spending or consumption of wealth rather than saving it. On second 
thoughts however, it will be seen that whatever vehicle enables a man 
to reach town more quickly and there to spend his whole day upon 
productive activity, has as much right to be classed under capital as 
any other article which assists him in the business of production ; for 
instance the railway truck which brings coal to his office or the telegraph 
wire which provides him with commercial information. Indeed nothing 
is more difficult in practice than to draw a line between consumption 
and investment. Very often they are simply relative terms. Expendi- 
ture, which is consumption relatively to what a man has already earned, 
may very well be investment relatively to that which he may by its 
means be able to earn or produce hereafter. Even in the eating of a 
loaf of bread this twofold aspect is present. 



CAPITAL 27 

find him in the field. He was up in the mountains 
chipping at a flint. This was a lengthy business ; 
but when at last the axe was made, he took it out into 
the forest and felled a tree out of which he fashioned 
a strange, but not ineffective implement for breaking 
up the soil ; and when seed time came round a second 
time, he was better armed than ever before. He soon 
discovered that his year's work had brought him a two- 
fold benefit ; first he was able to break up a double 
acreage of land producing at least a double quantity 
of corn ; and secondly he was able to break it with 
half the expenditure of strength. His new tools were 
a permanent aid in the production of fresh^wealth, and 
from them he derived a recurrent benefit — and not he 
alone but his sons and his sons' sons after him. His 
axe and spade perished, or were discarded ; but 
other and better implements took their place. And 
so by slow degrees the world became immeasurably 
richer, being stocked by centuries of labour. We, the 
heirs of those who have gone before, live in houses we 
did not build, draw water from cisterns we did not 
dig, and eat the fruit of vineyards and orchards which 
others planted long before our time. Implements of 
a thousand kinds, machinery, mines, railroads, ships, 
harbours, and whatever else we inherit, these are the 
things the possession of which makes life so easy for 
us, and the lack of which would make it at once so 
difficult. They are the world's capital. 

All capital comes from a surplus. By the nature 
of things man is constantly consuming what he pro- 
duces ; and if his consumption keeps even pace with 
his production, no progress can be made. Somehow 
or other he must get ahead of his consumption, pay his 
way in advance, steal, as it were, a march on time. The 
opportunity may come to him in one of three different 
ways — it may come by working harder, as the stone- 
age man might have made his axe by sitting up at 



28 NEW FALLACIES OF MIDAS 

nights. It may come by working more intelligently, 
as when man first learnt to manure the soil and so 
increase its yield. Or lastly it may come by a stroke 
of fortune, an abnormal harvest, a lucky vein of ore, 
a discovery of some new property in nature. It matters 
little however how the surplus comes, what matters 
much is how the surplus shall be used. If, because the 
granary is full the farmer neglects his field, and like 
the rich fool in the parable, turns to indolent consump- 
tion, in due course the granary will be emptied and 
matters stand just where they were before. Even the 
man who hid his talent in the napkin acted more 
prudently than that. Yet a surplus resting idle and 
not put to proper use is capital in no true sense. For 
it is the essence of capital that it should breed fresh 
wealth, and secure to man some present advantage 
or profit. Whether the surplus sets him free to make 
a spade, weave a cloak or build a house, the issue is 
the same. For in each case his future equipment 
will be more complete as he goes about his business. 
With a cloak on his back he can brave any weather, 
he can dig his field quicker with a spade in his hand, 
he will sleep sounder and wake fresher with a roof 
over his head. In short, he will be not only a happier, 
but a more useful, more efiicient and more productive 
man. His surplus has not been used as an oppor- 
tunity for some momentary excess, a barren tempta- 
tion to a superfluous meal or an idle holiday. It has 
turned to an interest-paying investment ; and in the 
long run it will be found as it was in the fairy tale 
that the golden eggs are far more valuable than the 
flesh of the goose herself which lays them. 

In practice, it is true, the use of capital is a more 
complicated matter. Now-a-days a man does not 
turn aside to labour in some new direction because his 
ordinary labour has brought him a surplus above his 
normal needs. He invests what he can save in a 



CAPITAL 29 

company or business, or lends it to a bank which does 
this for him. Yet the transaction is virtually 
the same. If he buys shares in a cotton mill, he 
becomes owner or part owner of a machine which makes 
handkerchiefs for other men ; and these other men will 
give him money for the same wherewith to satisfy 
his own needs. Even when capital is counted in 
millions, and finance is one vast game of I.O.U's there 
is still no difference. When men speak for instance 
of the nation's capital, it is not of hoarded gold that they 
are thinking, but of our coal mines and iron foundries, 
our docks and steam-boats and ship-canals, our rail- 
roads and factories, not in England only but built by 
English enterprise and by English savings in every 
quarter of the globe. These, like the primitive axe- 
head, are simply the results of a surplus well and wisely 
used. Capital and interest are but new names for 
things which have existed since the world began. 

And since the world has been going for a good while 
now, the bulk of its capital has steadily and prodigi- 
ously increased until the very face of nature has been 
transformed by the handiwork of man. Capital is all 
around us, not only in the roads by which we travel 
but in the lamps which light them up at night, not only 
in the dams which keep our rivers from flooding out 
the valleys, but in the pleasure-boats which cruise upon 
them. In a word, it is the whole paraphernalia of 
civilised existence. In every trivial daily act we needs 
must use this accumulated product of man's toil both 
past and present ; and we have come so to rely upon its 
use that if it were suddenly taken from us we should 
be plunged back into those dark and helpless ages 
when mankind lived and fed like beasts, when to sleep 
was to sleep under the stars, when to travel was to 
go afoot ; when each depended for his very survival 
upon brute strength, tough teeth and nimble fingers. 
These at least man still controls whatever catastrophe 



30 NEW FALLACIES OF MIDAS 

befalls him — and when all his capital is gone even the 
bankrupt can conimand the price of his bod5^'s labour. 
For us, then, who owe so great a debt to those who 
have gone before, there remains a corresponding duty. 
It is not for us to spend where they have spared ; nor 
is it enough to leave things simply as we found 
them. Both for ourselves and for those that will 
come after us, we must (if progress is to continue) 
accumulate still vaster capital, and put it, if possible, 
to still better use. Thrift in the years before the war 
was not a fashionable virtue, and even now, supposing 
the lesson of saving to have been learnt, we need to 
study more carefully the disposition of our savings. 
This is perhaps the crucial question, for the possibilities 
are legion. To invest our spare cash, like Mr. Penny- 
wise, in prints, may well prove a profitable deal ; 
but aesthetic pleasure, however admirable in itself, 
does nothing whatever to satisfy the more pressing 
needs of man. Even the possession of a motor car, 
while adding to its owner's comfort and perhaps in 
some small degree to his efficiency, does not very 
materially contribute to that larger end. The Mexican 
rail-road on the other hand, though it turned out to 
be a temporary failure, must have added considerably 
to the world's supply of food. It encouraged settlers 
to open up new country, brought them implements 
or whatever else they needed, and then in turn brought 
back to others the products of their labour. In the 
use and investment of our capital, it is a real duty to 
consider not only the return which it will bring to our 
own pockets, but the service which it may perform to 
mankind at large. Capital, which merely ministers to 
the comfort or luxury of men, is less serviceable 
than that which provides them with the necessities 
of life ; and so long as the more pressing needs re- 
main unsatisfied theirs is a prior claim. Yet, 
while we endeavour to improve and multiply the agents 



CAPITAL 31 

of production, there is one agent which it is of 
first importance that we should not forget. We must 
never omit to foster that human capital (if so it may 
be called) which consists in the physical powers and 
mental efhciency of man himself. It is far better to 
build up a healthy, and keen-witted race than to erect 
an extra factory or mill. For machinery may be 
bought at too dear a price, if the ecomony which buys 
it starves the strength and vigour of men who work 
it. So it is obvious that the conservation of this 
human capital must take precedence of all the rest, and 
yet this is a truth which has too often been forgotten 
both by individuals and by peoples. The French 
nation is noted as a model of thrift ; the savings of 
French workers are invested in every continent ; 
yet (as some think) their economy has resulted in 
a standard of living which is too low for maximum 
efficiency ; and it may well be that this passion for 
thrift is one among other causes of a declining birth- 
rate. The same mistake has, in the past at least, 
been only too prevalent among English manufacturers, 
who were often more concerned with building up their 
business and providing new machinery than with 
paying their employees a wage sufficient for their 
wants ; the natural result has been that the workers' 
health has been sapped by insufficient nourishment ; 
and so what the out-put of the factories gained by im- 
proved mechanical efficiency was lost again by the 
incapacity of the workers to perform their best work. 
It is clear that to strike a proper balance between 
consumption of income and economy of income is 
never an easy matter ; but before all it is necessary 
to realise that we have not here to deal with two 
alternatives, which are mutually opposed, but with 
two courses leading to a single goal ; which, is by 
whatever means, to achieve the most complete and 
permanent satisfaction of all human needs. 



CHAPTER IV 

THE PARADOX OF PROGRESS 

Nothing seems easier in theory than to prophesy 
milleniums. For ten thousand years man has toiled 
with tireless patience ; he has developed vast resources ; 
he has devised new and efficient methods of production ; 
and the time must surely be coming when he will 
reap the due reward of all his industry and thrift. 
In old age the individual labourer counts upon ceasing 
from his toil and enjoying his well-earned respite ; 
and when campaigning days are over, the veteran 
obtains his full discharge. Is there then for the human 
race at large no ultimate period of emancipation 
from the uncongenial drudgery of bread-winning ? 
Surely we may look forward to some distant day 
when the whole business of providing food and drink 
may be left to mere machines, and life may be given 
wholly to higher and worthier activities. 

Yet when we cease to dream of what might be, 
and face the facts which are, we must recognise how 
little sign there is as yet of that day coming. For what 
do we see around us ? It is certainly no Utopian 
universe — the manhood of whole cities confined in 
stuffy offices and bending from high stools over the 
calculation of innumerable ciphers, the populations 
of broad counties spending their days in subterranean 
caverns intent upon their grimy mole-like business, 
the health of our women wasted amid the dust and 
rattle of unwholesome factory sheds, our men's vigour 
sapped before the scorching breath of furnace fires, 
our children taken from school and set to earn their 

32 



THE PARADOX OF PROGRESS 33 

living at fourteen years of age. Every day competition 
seems to grow tenser and more bitter. The more 
trade thrives, the heavier seems the demand upon our 
workers ; and, as the world grows rich, the more 
conscious does it become of the poverty of millions. 
Fate seems to have cheated us, as Laban cheated 
Jacob, and just when we look to receive our promised 
recompense, a fresh term is added to our labours. 

In all this, if there lies no fault of ours which we can 
remedy, there is at least a puzzle to which we must 
find an answer. 

Dean Swift professed to find one, when he wrote 
his " Modest Proposal " for utilising the children of 
poor people in Ireland. What was wrong with the 
world, as he saw it, was simply that there were too 
many people in it. We suffer from overcrowding, 
and the remedy which he suggested was nothing less 
than to make away with superfluous babies and use 
them as food for the table. What Swift wrote in 
irony, has been maintained by others in grim earnest. 
Some like Malthus, though they would perhaps draw 
the line at the cannibal feast, are convinced that the 
only hope for the ship of state is to jettison some ot 
its crew. Others, though they have no stomach for 
the remedy, make no doubt of the disease, and exult 
in the fact that birth-rates are falling among the more 
civilised nations. And on the face of it, the argument 
is specious enough. Mankind has multiplied at an 
amazing rate. The population of Great Britain has 
more than doubled in a century. That of Russia 
increases by four millions every year. When there 
are so many fresh mouths to fill, it seems inevitable 
that someone must go short ; and, if there is a short- 
age, the natural consequence is a desperate struggle 
to survive. In short, while the old quarrel between 
man and nature is beginning to be settled, the war 
bewfeen man and man is increasing in violence. 



34 NEW FALLACIES OF MIDAS 

This sad and hopeless theory is happily mere moon- 
shine. For the world is not within a thousand years 
of being overcrowded. That there are still huge 
tracts of country almost empty, is obvious enough ; 
in Russia a square mile supports a population of twenty- 
three persons, while in a prosperous land like Belgium 
the average was formerly 625. The real question is 
whether the resources of the country are adequate 
to support the increased population. Now, if science 
has taught us one thing more than another, it is that 
we know very little indeed of the wealth which still 
lies hidden in the earth. It is an unfathomed reservoir 
of which hitherto we have but skimmed the surface. 
Not a year passes, but it brings to light new products 
and properties undreamt of. Men have been farming 
for several thousands of years ; and yet how little 
do they understand their business. English cornfields 
for example produced, before the war, about one fifth 
of the grain which we consume. Yet we are told on 
the best authority that by making a clean sweep 
of our old-fashioned appliances and slow conservative 
methods, and by adopting a strictly scientific agriculture 
like the Danes, we might raise more than a half, perhaps 
three quarters, possibly even the whole of what we 
need. If this seems near to the miraculous, science has 
many such miracles in store. Long before our coal 
fields are exhausted, we may be certain that some 
substitute for coal will be discovered ; and until the 
resources of the earth have been fully and scientifically 
exploited, the growth of population need have no 
special terrors for economists.* 

* In point of fact, there is a law, already proven in many European 
countries, that as the standard of civilisation is advanced, the rate of 
increase declines. The increase of population in Great Britain is now 
less than one per cent., in France there is a positive decrease. This is 
due in part no doubt, to the selfishness of individuals, but far more to 
the self-restraint of parents who prefer to bring up a small family in 
decent comfort and with a proper start in life, rather than to increase 
the number of their children to the prejudice of their future happiness 
and efficiency. 



THE PARADOX OF PROGRESS 35 

Indeed the argument might very well be all the 
other way. England could hardly be so rich to-day, 
if her population were no greater than it was a century 
ago ; for our coal-fields and our iron-mines could never 
have been exploited. The truth is that there is a 
positive advantage in numbers, if proper use is made 
of them. A battalion in which every member's part 
is regulated and the strength of all combined, is some- 
thing more than the aggregate of a thousand men. 
Such things are not to be calculated by rule of three ; 
and it is the same with labour. What we need is to 
organise our efforts, to use each individual to the best 
advantage, and win our way not by sheer power of 
numbers but by scientific co-operation. If Japhet 
instead of joining his brothers in Noah's field had turned 
his attention to the science of manures and spent his 
time in pounding up Mammoth's bones, I have no 
doubt that his labour would have been more pro- 
ductive than it was by working with a spade ; and 
the harvest would have sufficed to feed the entire 
population of the Ark. And so to-day, when the 
nation increases in numbers, it does not follow that the 
new-comers will necessarily be set to work at the old 
industries. In modern campaigns they say that three 
men are employed behind the firing line for every one 
in the trenches ; and equally in the work of production 
a man contributes as much to the success of the harvest, 
if he makes a plough as if he drives it. So, though 
every acre of the earth were cultivated (which it is not) 
there would still be room for helpers in the workshop or 
the mine, or perhaps even more in the laboratory or the 
offices of the Board of Trade. The true function of 
science is to increase the efficiency of the race, and not 
to curtail its numbers. Wise use of man-power and 
skilful adaptation of machinery is the swiftest cure for 
our industrial distresses. For not only will efficiency 
increase production ; but also by the increase of produc- 



36 NEW FALLACIES OF MIDAS 

tion efficiency will also be itself increased. Men who 
consume freely will also produce freely ; and experienee 
shows that the well-fed and prosperous worker is more 
efficient and more productive than the destitute and 
hungry. Under proper conditions every new child that 
is born into the world, should be a reinforcement to 
our strength and not a drain on our resources ; mean- 
while, in this faith, we need fear no rising birth-rate 
nor copy Spartan methods with our babies yet. 

This old-fashioned bogey which so alarmed our 
grandfathers now counts among exploded fallacies, 
and if we seek to understand the paradox of modern 
progressand know why a world which has become so 
rich must still work so hard, we shall not look to the 
growth of population, but rather to the facts of human 
nature. The clue lies in studying psychology instead 
of statistics, and in endeavouring to reform ourselves 
rather than our institutions. The most sweeping 
social revolution could not alone avail to help us much. 
For the redistribution of the good things of life would 
be useless, unless the good things continue to flow in 
from field and factory. And if the flow is to continue, 
so must work also. The truth is that as long as human 
needs and appetites increase, the stress of work cannot 
be diminished. For a fact more permanent than 
private property, more universal than the selfishness 
of the rich is the inability of human nature to be content 
with what it has. Mankind is as insatiable as the leaky 
jar which the Danaids were for ever filling but which 
was never full. We are like children who demand jam, 
when served with bread and butter ; and then when 
given what they ask, immediately call out for cake. Half 
a century ago we learnt to ride on wheels ; but no 
sooner had we done so, than we sought some automatic 
method of propulsion ; so we have passed from one 
invention to another, until what was once considered 
a miracle of speed, now seems a snail's pace. Last of 



THE PARADOX OF PROGRESS 37 

all, having tired of such dull terrestrial motions, we 
have taken to ourselves wings and aspire to navigate 
the skies. Now, as we have seen, science and invention 
can do much to lighten the task of manufacture. By 
patient industry and forethought the business of 
wheel-making might become mere child's play and 
every man might own his cycle ; but if the moment 
that this has been achieved, man discovers a need for 
aeroplanes and motor-cars as well, he is imposing upon 
himself a fresh and still more arduous task. His energy 
and enterprise we cannot but admire, but if he grumbles 
at the trouble of producing them, we must tell him that 
he has only himself to blame. 

It is perhaps too frequently forgotten that much 
as our capacity for production has increased, our 
capacity for consumption has increased along with it. 
This is, beyond doubt, both inevitable and right ; 
but no less inevitable is a corresponding necessity for 
work. Were we content to-day with the simple fare 
and scant comfort of the old cave-dwellers, one hour's 
work out of the twenty-four v/ould easily suffice to 
meet the call. Even to maintain the standard of a 
century ago, we might well dispense with working 
overtime. But with that standard no modern labourer 
would ever be satisfied ; he expects and gets all manner 
of things his father never dreamt of. Not only does 
he keep a better table, wear smarter clothes, and furnish 
his cottage more pretentiously ; but as often as not he 
will buy his evening paper to read the racing results. 
On Bank Holidays he will take a trip to the seaside. 
Cheap gramophones are to be found in every home. 
Ihe music halls are crowded. Life offers to him 
numberless new opportunities of comfort and amuse- 
ment ; and naturally enough he desires to gratify 
these new found wants. But sometimes it seems to 
escape him, when he makes his frequent demand for 
shorter hours, that to all this growing plenty 



38 NEW FALLACIES OF MIDAS 

there must be another side. Food, houses, gramo- 
phones and papers do not grow upon the hedgerows. 
They cannot be cheap and plentiful unless somebody 
works to make them so. Not even the working man 
can have his argument both ways. Leisure and 
pleasure are two excellent things ; but, being as they 
are mutually exclusive, a choice must be made between 
them. If the burden of production is to be lightened, 
there is one easy way and that is the limitation of 
consumption, and if we cannot have all that we want 
without intolerable exertion, we must be content with 
less. We must learn to check or correct the growth 
of our desires, or rather to discriminate between those 
which should be gratified and those which should be 
denied. Real progress lies not so much in the mere 
multiplication of our wealth, as in the proper discern- 
ment of what is true wealth and what is not. 



CHAPTER V 

LUXURIES AND NECESSITIES 

Everyone would agree that there are many pleasures 
which it would be better to do without ; but the agree- 
ment ceases, when we begin to consider which they are. 
It might be an amusing exercise to draw some imaginary 
line between the ''necessities " and the ''luxuries" 
of life ; but in practice such a differentiation is as 
useless as it is impossible. There can be no disputing 
about tastes ; and what one man considers indispens- 
able to comfort, his neighbour thinks an unjustifiable 
extravagance. For what, are after all, the " necessities " 
of life ? Food and drink certainly ; but how little 
or how much ? Clothing is a necessity to most of us ; 
but not to the native of Kikuyu. Houses are indis- 
pensable, I suppose, in northern climates ; but umbrellas, 
clocks, ornamental furniture and pictures, we could 
do without every one of these at a pinch ; yet who 
would discover a " luxury ' ' in the purchase of a drawing 
room table or a cheap print of Raphael's Madonna. 
Or, again, if past history is to be considered, we find 
no fixed or level standard. Now-a-days a decent 
drainage is considered a necessity ; but the Athenians 
with all their culture and aesthetic taste, were not of 
that opinion. And most certainly we should not thank 
some candid admirer of the middle ages for reminding 
us that life is tolerable without a bath. 

The fact is that the " luxury ' ' of one generation is 
the "necessity" of that which succeeds it. What 
the few enjoy to-day as a privilege, the many will 
demand as a right to-morrow. Human beings are 

39 * 



40 NEW FALLACIES OF MIDAS 

imitative creatures. If my neighbour hits upon some 
new convenience or ornament of life, I, when I can 
afford it, shall follow his example. So the habit 
spreads till it becomes a fashion, until our children 
will never be content to be without it, and that is how 
the world moves forward. For this reason it would be 
not merely idle, but positively dangerous to ban all 
luxury, or to condemn the man who enjoys what others 
lack. If nobody had ever for his own convenience 
invented the luxury of a bathroom, our houses would 
all be bathless to this day. Somebody must take the 
lead ; then the rest will follow like a flock of sheep. 
So long then as the present social and economic order of 
the world continues, the forward march of civilisation 
will depend mainly on the enterprise of individuals 
and even the plutocrat may prove useful as an apostle 
of progress. 

And indeed it is no mere concession to self-indulgence 
that allows the list of so-called necessities to lengthen. 
Only the savage lives purely for his stomach. Among 
civilised men other unnecessary tastes call for satis- 
faction ; and, as Plato said, a life supported on a bare 
margin of necessities would be fit for nothing but a 
" town of pigs." It was never man's duty or his desire 
to rest content with a minimum ; and the fulfilment 
of the higher part of his nature requires not the necess- 
ities alone, but a whole pantechnicon of comforts. It 
is a favourite maxim with philanthropists that men 
cannot be good so long as they are paupers ; and 
although genius has sometimes thriven under the 
severest of conditions, the best work is generally done 
by those who are least handicapped by privation or dis- 
comfort. Most of our own great poets (though poets and 
artists are popularly supposed to starve) have been men 
of comfortable means. The nerves and health of the 
business man would suffer, if he could not retire 
nightly to some distance from the town ; the scholar's 



LUXURIES AND NECESSITIES 41 

work is in some measure dependent upon the comforts 
of his study and his fireside chair ; and no Prime 
Minister would be efficient who was forced to make his 
own fire or to black his own boots in the morning. In 
short, the more we intend to give the higher faculties 
free play, the less interference must they suffer from 
the body. It would indeed be an evil day for man 
when he ceased to employ his hands and muscles ; 
but he should be master and director of his physical 
energies, not the slave of his physical needs ; and, as 
time goes on, he will more and more rely upon arti- 
ficial conveniences and comforts, and eliminate the 
many minor occupations which now encroach upon the 
main business of his life, and the many trivial anxieties 
which distract his mind from better and worthier 
things. 

Yet, though " luxuries " may help the individual 
to attain some higher standard of usefulness or culture, 
it must not be forgotten that his advantage is almost 
inevitably some other person's loss. If the supply of 
both work and wealth were unlimited, I and my 
neighbour might each of us have plenty, and the 
indulgence of his luxurious habit need not be made at 
my expense. But, unhappily, production is not un- 
limited. The same field cannot produce potatoes for 
him and pine-apples for me ; nor can a workman make 
boots and silver buckles simultaneously. If then I 
must go hungry that he may enjoy dessert, or ill-shod 
that he may have fine buckles to his shoes, it is not 
so easy to observe the precepts of the Tenth Com- 
mandment. 

This is precisely the grievance which the necessitious 
poor may justly entertain against the luxurious rich. 
Even though the latter' s wealth should not be wasted 
on mere personal enjoyment, but wisely spent in the 
service of science, art or culture, yet none the less the 
many suffer (for a time at least) by what the few will 



42 NEW FALLACIES OF MIDAS 

gain ; for wealth and labour which might have gone 
to the production of necessities for the poor, will 
have been diverted to unnecessary production for the 
rich. When Mr. Lloyd George was conducting his 
famous land campaign, the correspondence columns 
in the daily papers were filled with the righteous 
indignation of the threatened land-owners. On the 
face of things he had some cause for his complaint. 
Here was he, so his defence ran, making of his park 
and garden an ornament to the countryside, advancing 
the science of horticulture by his experiments with 
pink carnations, and above all, providing work for a 
score of gardeners who would otherwise be thrown 
out of employment. Being a benefactor to the com- 
munity on all three scores, he bitterly resented the un- 
justified attack of an ungrateful politician. 

The answer to his arguments is obvious enough. 
'' If," we should say, " every man, woman and child 
in England has bread enough and to spare, there is 
no more to be said, and your claim to social virtue 
may be granted. If however (as is very palpably 
the case), many a child goes hungry because bread 
is not plentiful or cheap enough to suit his parent's 
pocket, then all your fine arguments are not worth the 
cost of printing. As for the men who serve you, they 
would be employed just the same, if your park were 
ploughed up for corn and your garden thrown into 
allotments. And what is more, they would be em- 
ployed to far better purpose. At present, their labour 
goes in the production of peaches and carnations ; 
neither of which will go to fill a single poor child's 
mouth ; but if the land were under crops there would 
be potatoes or grain to show for it ; there would be 
a substantial addition to the world's supply ; and, 
since bread and vegetables do not dissolve into nothing- 
ness, somebody would be fed who had previously 
been stinted. 



LUXURIES AND NECESSITIES 43 

The same argument holds good of hixury in all its 
many forms. If the price of imports is kept high, 
because a scarcity of ships makes freight dues heavy, 
then the Transatlantic liner with its bedroom suites 
and baths and tennis courts and promenades is a 
crime against society. If, again, cheap motor-buses 
are badly needed to carry labourers to their work, 
what right has the milllionaire to occupy the mechanic's 
time in making him a car. It is difficult to see how this 
can be gainsaid, or how the sacrifice of these luxuries 
could fail to confer a direct benefit on others. It is 
too little remembered that thrift is a public service 
as well as a private virtue. When a man saves a 
hundred pounds and makes a new investment, he does 
something more than increase his own personal income. 
He also benefits the community at large. The benefit 
is more obvious and direct if he invests his money 
in a company which ministers to the public needs by 
making motor cars or merchant ships. But whatever 
be the form of investment he prefers, he is adding to 
the sum of the world's capital, and thereby increasing 
the total of the world's production ; and that is after 
all one of the simplest ways of making the world 
happy. 

We need to think of the world more than we do as one 
great household which is affected for good or for ill 
by the thrift or extravagance of every member. The 
father of a family would be blamed for spending his 
wages upon drink, if this meant that his children 
would go short of bread and butter. On the other 
hand, he would be acting almost as foolishly if he 
failed to keep himself in food and clothing adequate 
to the maintenance of his own efficiency or position. 
Certainly, if he can afford to do so without stinting his 
family, it is a plain duty. He has in short to steer 
a difficult course between conflicting claims, and he 
must constantly be balancing one good against the 



44 NEW FALLACIES OF MIDAS 

other. The same is true of the relation of each indi- 
vidual towards the social family. He too must balance 
the interests of others against the interests of self. 
The two often seem to be utterly opposed ; and they 
can be brought into harmony only by the knowledge 
that each individual has a definite part to play as a 
member of society and a citizen of the world. It 
is his duty to play that part as usefully and efficiently 
as he can ; and whatever enables him to do so, he is 
well within his rights in claiming. If he works better 
for some relaxation, let him by all means visit the 
theatre or the golf-course ; if he can talk or write or 
think the better for wide reading, let him buy books ; 
if experience of the world will broaden his judgment 
and his interests, let him travel. The indulgence of 
these tastes (if they are within the compass of his 
means) are at least a justifiable extravagance ; for 
though they involve some drain upon the labour 
and resources of the community, they confer an ade- 
quate benefit in return ; a man, who is cheerful and 
intelligent and open-minded, is at least not failing in 
one duty to his fellow-men. On the other hand, 
pleasures which lead nowhere, which take the bread 
out of other people's mouths, or which squander the 
fruit of other people's work without any such ulterior 
compensation, are indefensible, at best they are a selfish 
frivolity ; at worst they are a criminal waste. 

In such matters it is of course impossible to lay 
down any fixed code or canon, or to say which luxury 
is justifiable and which is not. Every man must 
judge for himself according to his own nature and 
according to his own ideals. For one man a distant 
week-end journey may be time and money well spent ; 
for another the pleasure and value of the visit might 
be altogether incommensurate with the cost. In order 
to estimate the advantage or disadvantage of each 
expenditure, we must know not merely the whole 



LUXURIES AND NECESSITIES 45 

circumstances of the individual's life and character, 
but the economic condition of the whole world as well. 
To set a true value on every new departure from the 
normal standard of life, we should require the gift of 
prophec^^ ; for only if we were allowed to look into 
the future could we tell whether (all things considered) 
the new departure will have assisted progress or re- 
tarded it, or whether the direction of energy into fresh 
channels will have been a benefit or a waste. In such 
ignorance of future developments men once debated 
and doubted the value of the railway train, and even 
now who can tell if the course which modern civilisation 
is following is the right one, and whether our growing 
desire for novelty and excitement, our preference for 
town life over country life, and our restless pursuit of 
luxuries at the expense of leisure will make for the 
ultimate happiness or misery of mankind ? The 
future is matter for guess work, and we must grope 
forward following our instincts, but still more reaching 
forward to our best ideals. We must first form in our 
minds some clear conception of man's destiny, and 
know what we would have him be ; and then perhaps 
it may be less difficult to discriminate between his 
desires and tell which is good to satisfy and which to 
refuse. 

Economic science must remain ill-defined and in- 
conclusive if it considers only the satisfaction of 
appetites or the regulation of supplies and there stops 
short. We seek wealth wherewith to satisfy our needs, 
since we believe that this will help to make us happy : 
and just because happiness is a moral and not a 
material state, we cannot neglect or exclude the moral 
issues which underlie the production and consumption 
of wealth. It is no profit to a man, if he gain the 
whole world and lose his own soul ; and in the last 
resort, the getting or the spending of wealth is nothing 
except as it affects men's character for good or ill. 



46 NEW FALLACIES OF MIDAS 

Labour is wrong which serves but to satisfy some 
vicious craving ; and our desires are wrong too, if 
other men, that we may be satisfied, must engage 
on work which undermines the health or destroys 
the soul. So long as even one member of the community 
is deliberately sacrificed to the pleasure or gratification 
of the rest, we cannot claim to have reached the 
ideal state ; and the goal of political economy will 
only have been won, when every human being alive 
is both wise and happy, and has enough to win and 
to maintain a sound mind in a sound body. 



CHAPTER VI 

EXTRAVAGANCE AND WASTE 

Before however we try to picture the state of 
society which we desire to see estabUshed and towards 
which, so far as we may, we must endeavour to shape 
our future course, it is worth while to take stock of 
our present condition of the world, and to examine 
more closely some types of production which are 
without doubt wasteful or deleterious to mankind. 
I say production (though clearly the consumer who 
demands the goods is the primary cause of their 
manufacture) partly because production precedes 
consumption and is therefore more easy to regulate 
at the source, partlj^ because the man who produces 
or purveys a harmful luxury is often as much to blame 
as the man who buys it. Human imagination is so 
feeble that we seldom know what we want until we 
see it ; and human nature is so weak that when we 
have seen we often lack strength to refuse. One sets 
the fashion and others follow ; and the consumer's 
gullibility becomes the producer's opportunity ; so 
the one may do as much harm by his haste to make 
money as the other by his readiness to spend it. 

It is a common practice with economists to divide 
labour into two classes, productive and unproductive. 
This classification is clearly not to be taken in its 
literal sense ; for absolutely unproductive labour 
is a contradiction in terms ; unless it were the building 
of a house like a card castle simply in order to knock 
it down again, such a thing does not exist ; all labour 
is directed to some end and therefore produces 

47 



48 NEW FALLACIES OF MIDAS 

something. The true meaning then of the distinc- 
tion must be this ; some forms of labour tend to 
the increasing of man's real wealth, these are pro- 
ductive ; others on the contrary to wasting or destroy- 
ing it, these are unproductive. The most obvious 
instance of such destructive or unproductive labour 
is the manufacture of military material. From a 
national point of view indeed this seems to satisfy a 
legitimate desire for peace and safety ; and nothing 
is more necessary than to be well armed, if there is 
a bellicose neighbour across your border ; but for all 
that nothing does more to fritter away the wealth of 
the world. People talk sometimes as though the 
building of dreadnoughts or the casting of howitzers 
were a blessing in disguise, because forsooth it gives 
employment to so many thousand artisans. There 
could be no more pernicious fallacy ; the labour of 
this vast host of men could be put to some far better 
use than the manufacture of instruments which are 
intended for no other purpose than to blow our 
neighbour's towns into the air or to send our neigh- 
bours' ships (built also at great expenditure of pains 
by them) to the bottom of the sea. The men who 
can build a man-of-war can also build a merchant 
ship, and lathes which can turn shells, can turn engine- 
shafts or cylinders too. To convert these warlike 
preparations into peaceful industries might once have 
seemed a difficult matter ; but four years of war have 
shown us how swift a conversion may be possible in 
a contrary direction, and if we can beat our plough- 
shares into swords so easily, we can surely find little 
hindrance to beating them back again. The trans- 
formation could be achieved ; and if it were, an immense 
economy would result from it. The nation would save I 
know not how many millions in taxation ; and we 
should be free to invest all those saved millions in the 
building of merchant ships or machinery or whatever 



EXTRAVAGANCE AND WASTE 49 

we need. Under the conditions of the years before 
the war, the peoples of Europe have resembled as it 
were the builders of Jerusalem, who worked with 
trowel in one hand and sword in the other, a posture 
equally ill-adapted for good masonry or prosperous 
industry. To rid ourselves of this handicap, we must 
effect a complete reversal of the policies and relations 
of all the peoples of the world ; and even now who can 
say if such a miracle be possible ? But if there ever 
comes a day when mankind shall be free to get both 
hands to the work, an intolerable burden will have fallen 
in an instant from our shoulders. 

There are other trades less honourable and if anything 
more deadly than the trade of war. To name but one, 
there is the manufacture of spirits and drugs that under- 
mine the health and morality of whole nations. 
Opium and absinthe have wrought more havoc than 
many wars, and the suppression of vodka among the 
Russians has added as much to the national happiness 
as it can ever add millions to the national wealth.* 
But out of the bulk of the world's production there is 
comparatively little that can be called down-right 
destructive ; far more misdirected energy is wasted 
upon the manufacture of goods which are neither 
directly harmful nor directly beneficial but simply 
negative in their effect. Now, though these do not 
actually destroy the fruit of other men's labour ; neither 
do they add in the smallest degree to men's efficiency 
or strength or skill. In other words they are unpro- 
ductive. Productive labour on the other hand does 
essentially add to man's efficiency and so pave the way 
for further production. It yields a return, so to speak, 
at compound interest, building up man's strength for 
fresh labours, and endowing him with skill or knowledge 
for fresh activities. The making of food and clothing 
is productive labour ; for though the food is consumed 

* There are more than ever drunk now (June, 191 8). 



50 NEW FALLACIES OF MIDAS 

and the clothes wear out, yet we have something to 
show for them. The bread which builds muscle and 
the clothes which keep a man dry and fit and warm, 
render him more capable for his day's work, and so 
enable him to take his share in fresh production. 
Even less material s<itisfactions, such as art or social 
intercourse or sport, leave some permanent result 
behind. Pleasures which afford wholesome recreation 
to tired body or jaded mind are far from wasted ; pictures 
music, poetry and learning store the mind with thoughts 
and memories and high ideals which are a possession 
beyond price and wealth for ever. But contrast 
these with the fruits of " unproductive " labour, un- 
wholesome food which gratifies, but does not feed, 
empty pleasures which degrade and exhaust instead of 
ennobling and reviving, flashy ornaments which have 
no saving quality of permanence or grace. All these 
are so much honest labour and good material thrown 
away. 

These satisfactions which do not satisfy, and 
pleasures which have no permanent effect, have 
been common in every age but perhaps in none 
so much as ours. The very facility and variety of 
modern mechanical production has flooded the market 
with meritricious and inexpensive articles, vv^ith the 
result that the standard of workmanship is lowered 
and public taste degraded. Vulgar taste is the pet 
extravagance of the century. The shops are full of 
goods which are cheap and nasty, yet tempting through 
their very cheapness. The poorer the buyer the greater 
the fascination which they will exercise upon him. 
In East London a lad will buy half a dozen shoddy 
cloth caps in as many months, though the combined 
cost of the six will far exceed the price of a single good 
one. It is true the manufacture of the cheap inferior 
goods is in many ways a benefit to the poor and is 
not in the strict sense "unproductive." They satisfy 



EXTRAVAGANCE AND WASTE 51 

indeed, but the satisfaction is transitory or superficial 
and their manufacture represents wasted time and 
wasted trouble, because it is not the best labour which 
men are capable of performing, and it is never good 
economy to give your second best. The demand for 
them encourages hurried, careless or mechanical work, 
and because such work is always liable to be under- 
paid (the trade in cheap shirts and ready made suits 
is notoriously conducted on "sweated" labour), the 
efficiency of the worker deteriorates and the quality 
of his future production suffers accordingly. The 
manufacture of half the goods which we see upon 
the counters, whether it be done by hand or by machine, 
is soul-destroying work which it profits no man to 
perform. And upon the consumer himself the craze 
for cheapness has an influence which is anything but 
good. He gets, it is true, " a lot for his money," but 
he does not in the long run profit by the bargain. 
In the first place, quantity is no true equivalent for 
loss of quality. Boots made out of paper will not 
wear, and the second rate watch takes a heavy toll 
in frequent visits to the mender. The moral effect 
is even worse ; for the lure of fashionable smartness 
blinds the eyes to true utility and prevents us from 
setting a just value upon the strength and beauty of 
good workmanship. Lastly, it encourages thrift- 
lessness under the semblance of thrift. The behaviour 
of ladies at a " sale " is an epitome of human weakness 
in this respect. Because we sight a " bargain " we 
buy what we do not really want ; or at any rate what 
we cannot afford. We rent pretentious villas built 
of lath and plaster and adorned with hideous terra- 
cotta tiles ; we fill them with furniture, not such as 
our forefathers once made to out-last centuries, and to 
be handed as an heirloom to generations, but miserable 
pinchbeck stuff that lasts a twelve-month and 
then falls speedily to pieces ; we drink wine manu- 



52 NEW FALLACIES OF MIDAS 

factured from currants, hang artists' " pot-boilers " 
upon our walls, dine off imitation willow-pattern 
plates, and all to make, as we fancy, a brave show, 
and practice upon the world's credulity. There is 
scarcely a feature of our modern life but bears witness 
to the crimes and follies committed in the name of 
cheapness. 

There is one other form of waste which in comparison 
with this last might seem excusable or even merit- 
orious ; I mean the waste which occurs in production 
through the use of superfluous labour or the expend- 
iture of unnecessary material. We should naturally 
applaud the man who lavishes superfluous energy 
upon his work from pure excess of zeal. But no 
praise is due when he does it from love of gain or 
from mere stupidity. We should call it culpable 
waste to employ two men to produce a thing when 
a single man could produce it just as well ; yet in 
one way or another most manufacturers are guilty 
of this unbusinesslike proceeding. The most noticeable 
and obvious instance of such a practice is the 
excessive use of advertisement.* It may be needful, 
as things are, to advertise, all is part of the price we 
pay for the questionable advantages of a competitive 
market. But advertisement on the present scale 
adopted is far in excess of what is necessary for the 
simple purpose of giving information, and (though 
experts differ as to the exact amount spent yearly in 
this way) it unquestionably represents an enormous 
addition, both in labour and material, to the total cost 
of production. The consumer benefits, it is true, in so 
far as his attention is attracted or his interest artificially 
aroused ; but even this is a doubtful blessing, and he 
little guesses how dear he has to pay for it. Some 

*0n the other hand, advertisement in moderation is not merely- 
legitimate, but necessary. People must have information : and the 
spreading of information, if properly organised, is a real economy. 



EXTRAVAGANCE AND WASTE 53 

clever quack concocts a new pill, from harmless, and 
common-place ingredients ; and then trumpets forth 
his great discovery in immoderate terms. His grate- 
ful dupes flock in their thousands to the chemist's 
shop and buy it, and the pill, for aught we know, may 
effect a multitude of cures ; but would it have effected 
less if newspaper compositors had been spared the 
trouble of setting up a hundred lines of print ex- 
tolling the virtues of the pill, or if some popular black 
and white artist of the staff of Punch had never been 
paid to prostitute his genius by designing humorous 
appeals to supposed sufferers, or drawing pathetic 
portraits of anaemic children ? Has the drug acquired 
new properties, because carpenters and bill-posters 
are set to disfigure the country-side and make our streets 
more hideous b} the erection of preposterous hoardings ? 
All this labour, when we come to think of it, benefits 
nobody ; and if it be a necessary feature of com- 
petitive trading, so much the worse for competition, 
and so much worse above all, for the unfortunate 
consumer. Yet, oddly enough he never seems to realise 
what an immense tax advertisement imposes upon 
himself. He imagines perhaps that when Messrs. X. 
present him with sample tins of cocoa or free catalogues 
of their sunimer sale they do so at their own expense. 
But if he reflected for a moment he would see that 
Messrs X. are out to make money. They require a 
clear profit over the working expenses of their business, 
and when they expend half as much again as the cocoa 
costs upon the advertisement of its qualities, they 
must of necessity raise its price in proportion. In 
fine, those columns in the Daily Mail and those 
hoardings erected in the streets are paid for some- 
how, and in the last resort the money comes out 
of the buyer's purse. We are a short-sighted, long- 
suffering people, and we take all this as a matter 
of course. Yet if a gentleman kept a trained 



54 NEW FALLACIES OF MIDAS 

journalist in the kitchen that while the cook was 
preparing the dinner, he might be composing a 
seductive menu to induce the guests to partake of 
her delicacies we should write him down as a fool 
or worse. 

But business methods which pass for enterprising, 
smart and up-to-date are not the only or the chief 
cause of dissipated energy. Far more waste is caused 
by methods which on the contrary are lax, old-fashioned 
and inefficient. Our industries are often regulated upon 
a system which is twenty years behind the times. 
In many factories the machinery in use is of a clumsy 
and antiquated type ; and if here and there a really 
up-to-date machine is to be found, it will hail as likely 
as not from the United States. Our railways are run 
without any strict notion of economy. Half their 
rolling-stock is kept standing idle from one year's 
end to the other ; and it has even been asserted that 
the average distance covered by a single truck is not 
much more than one mile per diem.* Automatic 
methods of loading, which might be installed at no 
great outlay and which would more than pay their 
cost in the economy of human labour, are not seriously 
considered. There is a similar scope for reformed 
methods and better organisation in almost every 
department of industry ; but perhaps the most startling 
and prodigious waste arises not so much in the process 
of production or manufacture but in the course of 
sale. The retail trade is not in itself an unproductive 
form of labour. Wealth is by definition that which 
satisfies my needs ; and my needs are not satisfied 
by a heap of coal at a Welsh pit-head or raw tobacco 
in Virginia. The middle man who delivers the one at 
my house and sells me the other across the counter 

* The estimate, which in the absence of statistical returns by the 
companies themselves cannot be final, is as follows : — 1.57 miles per 
day at 20 miles per hour, i.e.y under 5 minutes per day in effective 
motion per waggon. 



EXTRAVAGANCE AND WASTE 55 

is rendering me as important a service as the miner 
who wins the coal out of the pit, or the dealer who 
manufactures a cigar. Goods must be handled in 
large consignments by wholesale dealers, and then 
passed on by them to the retail dealers for distribution. 
Each performs a useful and necessary part and rightly 
claims a profit on the deal. But it is neither necessary 
nor useful that out of a population of twenty million 
workers two million should be engaged in such an 
occupation. That is to say that every five families in 
the country employ one person thus to wait upon 
their wants. The links in the chain connecting 
the consumer and the original producer have in short 
been multiplied beyond all reason, and the facts have 
only to be stated to appear ridiculous. It was the 
natives of the Hebrides who according to Dr. Johnson's 
epigram earned a precarious livelihood by taking in 
each other's washing. But it has remained for the 
" nation of shopkeepers " to discover the more excellent 
method of waiting on one another across the counter. 
But the indictment does not end there. After all 
these years of science and invention there is still 
scarcely a trade in which human energy is not squan- 
dered, scarcely a job which could not be performed 
with less effort and more efhciency by taking thought 
a little. We have yet to study the use and capabilities 
of the human instrument as closely as we calculate 
the power of inanimate machines : and here again 
there is much that America can teach us. Ever 
since the first experiments were made by James 
Taylor, of Pennsylvania, over thirty years ago, the 
methods known as Scientific Management have there 
spread rapidly. Taylor himself began his tests in 
loading pig iron. He first selected men of suitable 
physique : then he timed them at their work, varying 
the periods of activity and rest until he had ascertained 
the most effective combination. His deductions 



56 NEW FALLACIES OF MIDAS 

drawn, he was allowed to put them into practice at 
the Bethlehem steel works : and at the end of some 
three years, the experiment has attained the following 
remarkable results. In yards where 400 to 600 men 
had been hitherto employed, 140 now sufficed. Each 
man was handling ten to fifty- nine more tons per diem ; 
and his daily wage was increased by nearly seventy 
per cent. Taylor's idea spread : one of his followers 
made similar experiments in bricklaying. He dis- 
covered the ideal height for the mortar box and 
brick pile ; he designed an adjustable scaffold : and 
at last by these and other devices he relieved the 
labourer of so much superfluous exertion in bending 
down and straightening up, in sorting out the bricks 
and turning them in his hand, that the number of 
movements that went to the laying of a brick were 
reduced from thirteen to five, and the tal^ of bricks 
laid by a single workman in an hour was practically 
trebled. We need not follow the history of the method 
into other trades. Enough has been said to show that 
scientific management may work a real revolution 
in industrial output. It has, no doubt, its dangers as 
well as its advantages. Too great a tax may be put 
upon the workers' powers : the work itself may become 
too stereotyped and too monotonous : and in general 
the whole system seems open to the charge that it 
treats the human being too much as a machine and 
leaves too little to his own initative. The antidote 
is not far to seek. True scientific management will 
study psychology as well as statistics. It will consider 
human needs as well as human capacities. And 
it will give individuality full play, because the best 
work demands it. At any rate it is clear that much 
purposeless waste of effort now goes on which careful 
regulation and adaptation could prevent. Problems 
of man power are not confined to war : but war may 
have taught us a better and wiser use of it : and when 



EXTRAVAGANCE AND WASTE 57 

we have learnt the lesson, we may count upon a 
sure reward. The day will come when every labourer 
will be not merely more efficient in his work, but more 
prosperous, more leisured, more contented. It is 
a fact v/orth noting that wherever the Taylor system 
has been introduced, strikes and labour troubles are 
said to be altogether unknown.* 

Habit is strong ; and to remedy this state of things 
will take many years and much careful organisation. 
But amongst other things the war has proved a great 
awakener ; and little by little the forces of sound 
business and true economy will probably prevail over 
our haphazard and extravagant methods. Already the 
small shopkeeper is struggling hard in competition with 
the great stores which traffic upon a larger and less 
wasteful scale. Our industries too, are waking up ; their 
leaders are beginning to put their house in order. 
Science has now become the battle-cry of commerce, 
and with better organisation and more up-to-date 
equipment our factories will outstrip all previous records 
of production. There are signs too that the other 
manifold abuses of our economic system, will presently 
be reformed. The thriftless and selfish use of 
riches will be curbed ; — let us hope by men's own 
voluntary sacrifice and their sense of public duty ; 
but if not, then it will be done by presure from without. 
The patience of democracies is not unlimited ; and the 
will of the majority is found to prevail in the end ; 
and if the cupidity and self-indulgence of the few 
continues to waste the wealth which is vital to the 
welfare and progress of many, then the state has 
many weapons ready to. her hand. If land is witheld 
from profitable cultivation for motives of financial 
gain or private pleasure, then the law may one day 

♦Concerning the whole system see " The Principles of Scientific 
Management," F. W. Taylor and " Psychology and Industrial 
Efficiency," Hugo Miinsterberg. 



58 NEW FALLACIES OF MIDAS 

intervene ; heavy taxes may, if needful, be imposed 
upon the owner ; or if that is not enough, there is 
confiscation as a last resource ; which as it were 
by a stroke of the pen would convert pleasure parks 
into corn-fields and shooting moors into timber forests. 
Railways, coal-mines and even factories may one day 
be taken out of private hands and run in the interests 
of the whole community. Many experiments of this 
sort are already within sight ; some have actually 
been attempted. We have fallen indeed under the 
spell of the Socialist Gospel, and being blinded by the 
dazzling promise of democracy we look to her to per- 
form miracles and remove great mountains. But 
let us not be deceived ; if we pin our faith on legislation 
it will surely fail us yet, and our goal will seem as far 
away as ever. It is easy to confiscate; it is less 
easy to create. The salvation which we seek must be 
sought in the change of man's own self and not in the 
mere reform of institutions. No act of Parliament 
can make a people good ; neither can it make them 
truly rich or truly happy. By compulsion, you may 
check waste, eliminate extravagance, organise in- 
dustry and ease the dead weight of man's necessary 
toil ; but there the operation of compulsion ceases ; 
it can never cultivate in the producers the lively spirit 
of invention, nor a pride in honest craftmanship ; it 
can never teach the consumers to prefer good work 
to cheap work, nor to set quality before quantity 
and satisfactions which are solid and beneficial before 
those that are frivolous and worthless. This change 
can only come by the gradual education of men's 
tastes, and intellects and consciences, never by the 
drafting of rules and regulations. Compulsion alone 
is powerless to realise man's highest destiny and his 
best ideals, nor will it avail in ten thousand years 
to unlock the gates and people the streets of the fabled 
city of Utopia. 



CHAPTER VII 
UTOPIA 

(i.) 

What society will be like, and how man will live in the 
days when all are wise and happy, has been the therae 
of many a philosopher, from Plato and Sir Thomas 
More down to Mr. H. G. Wells. As is to be xpected 
no two of them are agreed together ; for it is impossible 
to say for certain what posterity will want or perhaps 
even what it ought to want ; and at best we can only 
guess. Nevertheless such guess-work has its purpose 
and its uses ; for did we not have some notion whither 
we are bound, how could we tell the road ? There are 
times in the world's history (and this present may well 
be one) when we stand doubtfully at parting ways 
and when we must try to discern which of two roads 
will lead us to our goal. We are tempted naturally 
to take the more direct and then, too late may be, we 
shall discover that the road we took was a wrong 
turning and the more devious and difhcult was the right 
one after all. Therefore, to draw, if only in imagination, 
the lines of our ideal society, is but to mark, as 
it were, our destination on the map ; yet with this 
difference ; in the map the country behind us and 
before us is equally explored ; in the chart of human 
history only the past is certain, what shall be can 
only be conjectured from what has been and what is. 
So, from the start we must assume (not blindly indeed, 
but with good reason) that the principles which held 
good yesterday and to-day will hold good to-morrow 
also ; and that however custom and circumstance 

59 



6o NEW FALLACIES OF MIDAS 

may alter, the instincts and ideals of human nature 
will in essence remain unchanged. 

Among all the pictures wherein men have fore- 
shadowed the coming of that ideal State towards which 
we all hope the world is moving, not the least daring, and 
yet perhaps the most truly and imaginatively drawn, 
is the work of William Morris. No student of political 
economy can read his " News from Nowhere " without 
a genuine delight, nor put it down without some 
re-awakened hope for human destiny. One great 
advantage at least it can claim over its predecessors, in 
that it was written after the Industrial Revolution had 
matured, and when our experience of the new uses of 
machinery had already taught us something both of 
their blessing and of their curse. On Morris' own mind, 
it is true, it was the evil side of this development which 
made the more lasting impression. He depreciates 
almost wilfully the value of mechanical invention ; 
he would fain break down the factory and the engine 
to set up the joiner's bench and the blacksmith's 
anvil, so dogmatically does he deny the right of dynamo 
and power-wheel to replace the craft of hand or skill of 
eye. Yet, by whatever narrowness of vision the 
mediaeval sympathies of Morris have availed to warp 
the details of the picture, none the less its main per- 
spective is accurate and broad ; its atmosphere shines 
true. His ideal country is a very human place, his 
men and women find happiness in just those things 
wherein men and women have always found them. His 
at least is a society which we might love and welcome ; 
and whereas Plato's Republic is too stern and grim 
for most of us, More's at once too naive and too 
sophisticated, I doubt if the man exists who would not 
most gladly and thankfully awaken, as Morris' hero 
woke, to find himself a temporary inhabitant of the 
delectable country of Nowhere. 



UTOPIA 6i 

It was (or so it seemed) a beautiful bright morning of 
June, when he left his suburban residence very early 
before breakfast to take a stroll by the river-side. 
He was a Londoner of Radical instincts and member of 
a club of red-hot Socialists, whose tongues had wagged 
freely overnight concerning the great revolution 
which was one day to come over the world. His 
thoughts, as they ran back over the academic argu- 
ments of the debate, were suddenly distracted by the 
changed aspect of the scene before him. He stood by 
the Thames, yet somehow not the Thames. The 
ferry-man whom he engaged to row him out, was dressed 
in a flowing blue tunic and talked like a well-bred 
courtier. As he rowed the boat down-stream past a 
sleepy, smokeless Hammersmith, discoursing strange 
things, as he rowed, concerning the salmon fisheries of 
Putney, they came presently upon a bridge so grand 
and fanciful that it outvied the Ponte Vecchio itself 
for strength and beauty. By this bridge the ferry-man 
moored his boat and brushing all offer of pay aside, 
conducted his astonished fare to a restaurant or ** Guest 
House." This Guest House was a frescoed hall with 
Gothic windows, marbled floor and open timber roof. 
As the pair entered, the waiting girls left scattering 
their balms and lavender upon the floor, and, taking 
each guest by the hand, led them to a table whereon 
were set ripe strawberries and roses freshly gathered 
from the garden plot outside. There sat down to 
table with them a Y orkshireman, a weaver by trade, 
who (as his friend the ferry-man explained) had over- 
done himself between working at his loom and his 
mathematics, and had come to stay in London, of all 
places in the world, for an out-door holiday. The 
Guest (for so the two friends agreed to call our stranger) 
was consumed with curiosity to know what all this 
might mean, but when he read upon the wall an 
inscription dated 1962, heard his companions talk of 



62 NEW FALLACIES OF MIDAS 

Epping Forest cleared of houses, and finally was 
introduced to a dustman who wore a surcoat of 
embroidered gold, and whose leisure hours were spent 
in writing " reactionary novels," he left his doubts and 
his questions unspoken, and abandoned himself as to a 
preposterous dream. 

The ferry-man, whose calling seemed to make no 
special claim upon his time, now proposed to take the 
guest out for a drive and to show him the sights of 
London. So the Golden Dustman was dispatched to 
borrow them a horse and cart, and off they went. 
The sights of London were the most miraculous of all. 
What strange sights the Guest saw there and what 
stranger facts were then disclosed to him, how he met 
an aged antiquarian and heard from his lips the true 
history of the great change, how he learnt, that all 
central governments were abolished and Parish »Parlia- 
ments reigned supreme, how he found the great 
metropolis as modest, cleanly and demure as a little 
market-town, Kensington a landscape dotted with 
green trees, and Piccadilly a " short street of hand- 
somely built houses," how Trafalgar Square was an 
orchard full of apricots, and the House of Commons a 
storage for manure ; — all this is a long tale which would 
but spoil in the telling. But, in brief, it was a changed 
London and a different world, different in the simplicity 
of the people's taste, the sober neatness of their 
dwellings, the beauty and aptness of their dress ; differ- 
ent too in the tranquil course of their work and leisure, 
free alike from anxious hurry as from vulgar dissi- 
pation ; but different above all in their frank good- 
natured happiness and their unfailing zest to be always 
doing a neighbour some good turn. 

In their work (and they are indefatigable workers) 
the first and guiding principle is to study the needs of 
others, the second to choose that task which best is 
suited to the aptitude and taste of each ; the third, to 



UTOPIA 63 

do whatever their hands contrived, with all their might 
and in scorn of slovenly or hurried workmanship. 

Manufacture is now wholesome where it had been 
foul and sordid, agreeable where it had been distasteful, 
a quickening joy where it had been a deadening 
drudgery. In short, it is become once more, as by its 
very name it should be, a craft of hand ; and by one 
expedient or another, the various evils of Industrialism 
as we know it, have in Morris' Utopia been done away. 

We may note, firstly, that wherever hand-made 
products are superior to machine-made, the latter have 
been discarded altogether. Thus thousands whose 
life was formerly one long maze of whirring wheels, and 
the dull recurrence of a soulless task, now in the happy 
land of Nowhere, taste the joys of individual craft- 
manship, and each learns to set upon his work the 
impress of his self. Some drive their independent 
trades ; others unite in Banded Work-shops to carry 
on the more complex processes. Each to his choice ; 
and even the heat of kilns and furnaces will not deter 
some enthusiasts from glazing pottery or blowing 
glass. 

Secondly, though handiwork has in the main sup- 
planted machinery, yet " all work irksome to do by 
hand, is done by immensely improved machinery." 

Thirdly, " When any piece of work is found too 
disagreeable or troublesome, it is given up and folk 
do altogether without the thing produced by it." 

Fourthly, toilsome but necessary tasks such as the 
making of roads or the digging of mines, are undertaken 
by the young and stalwart, in a spirit of cheerful 
service ; and as the ferry-man remarked, it is " good 
sport trying how much pick-work one can get into an 
hour," and a good training for the muscles to boot. 

Fifthly, and perhaps most noteworthy, of all, there 
is variety of work for every one. For, just as each has 
the free choice of his trade or profession, so each equally 



64 NEW FALLACIES OF MIDAS 

enjoys the free disposition of his time. Thus every 
man can indulge his peculiar hobby ; a weaver may 
spend his spare hours on geometry, a dustman in 
writing romances. If a helping hand is needed in 
some other quarter the daily task may be allowed to 
slide, and Morris' last chapters tell of a merry company 
of miscellaneous folk, gathered in the hay-fields of the 
Upper Thames. The ferry-man is there and has left 
his boat ; the girls are there and have laid aside 
their household duties ; even men of science, 
students and historians abandon their sedentary lives, 
and though some are poor hands at the start, all join 
in the game. Only certain churlish house-builders 
refuse their help^ — because forsooth they have found a 
job which " interests them," and they prefer to get on 
with their work. 

(ii.) 

Morris was no trained economist. Romance was 
more to him than science. His whole-hearted faith in 
human nature, his clear vision of what man might be 
at his best, rendered him impatient of material 
obstacles. For him to conceive of a Utopia was to 
believe in its possibility, and for such a nature nothing 
that was right was impracticable. Nevertheless, along 
with much that is pure fancy, there is also contained 
in his picture much that is sound sense ; and it is well 
worth while to sift and disengage the two ; For every 
reader, I suppose, the first impulse is to doubt whether 
any country which did its business upon such hap- 
hazard and ill-regulated methods as Morris' imaginary 
state, could possibly survive for a week. We are 
accustomed to believe that such prosperity as we enjoy 
is due in no small measure to the nice adjustment and 
close co-ordination of our industrial machine. Organ- 
isation is the catch word of the day, and we have 



UTOPIA 65 

admired and feared by turns that nation which has 
brought such mechanical efficiency to its highest pitch. 
Yet the worth of a system is to be known by its fruits, 
and we have seen what a harvest the Germans at least 
have reaped of theirs. To transform a people into 
a vast machine, to treat men and women as mere 
cogs upon a wheel, that is not the road to happiness, 
nor even in the long run perhaps to success. Elaborate 
as may be details of such a system and perfect as may 
be its method of getting the best work from each 
individual man or woman, yet so long as the system is 
imposed upon them from above, it must fall far short 
of man's ideal destiny. "A place for everyone and every- 
one in his place " is a well sounding motto ; but to find 
a man's true place in the world is not for officials and 
super-men but for each man himself ; he can find it 
if he cares to, and nobody else can find it for him. 

Organisation however is not perhaps the peculiar 
vice of our English industrial system ; it is certainly 
not too much of a machine, but I am not sure that it 
is not something almost as bad. Its development has 
not been made under the guidance of officialdom, it 
has sprung up at haphazard like the growth of a 
primaeval forest, and its loose entangling network clogs 
and hampers the tender plant of industrial liberty. 
We boast that Englishmen are free because of the 
absence of compulsion ; but the truth is that though 
they are not slaves of a system they are none the less 
the slaves of circumstances and chance ; and in that 
there is small ground for pride. Millions, as things 
are, have no real freedom in their choice of a profession. 
Our workshops are full of square pegs in round holes, 
and round pegs in square holes. A child born in the 
potteries is marked down from birth to follow in the 
family tradition. May be that his whole interest lies in 
plants and horticulture, and that he would make an 
admirable gardener ; but in the workshops he is 



66 NEW FALLACIES OF MIDAS 

secure of a living and to strike out a line of his own 
would be too hazardous an adventure. So lads are 
taken from school at fourteen and saddled for life with 
occupations for which they have neither aptitude nor 
taste. Once settled in a job, he will be a bold man that 
will leave it. If he cuts adrift from the one business 
which he understands, he has not the means or oppor- 
tunity to learn another ; and a meagre livelihood by 
unskilled or casual labour is the sole alternative to 
unemployment. As compared with him the labour of 
Morris's Utopia is as a freeman to a slave. He is free 
to choose his occupation, to take a job or leave it, to 
work long hours or short ; and in such liberty he finds 
not an excuse for idle sloth but a spur to more willing 
energy. He may be poorer and he may be less efficient, 
but there can be little doubt that he would be the 
happier man of the two. For only that man is truly 
happy who has realised himself to the full in his life's 
work ; and if we do indeed believe that each individual 
human being has a worthy place to fill in the world and 
a self to realise therein (which is only another way of 
saying that Providence understands its business), then 
we must allow him some more real freedom of choice 
to find that place and fuller opportunity to use it. 
In our perfect society nothing short of complete eman- 
cipation from the tyranny of systems and from the 
entanglement of chance must be our ultimate ideal. 

To consider by what precise steps that ideal may be 
reached is not here to our purpose ; but it is perhaps 
necessary to repeat that legislation . and officialdom 
alone will never achieve it. Indeed many of our 
modern reformers seem to be heading in the wrong 
direction ; in their zeal for efficiency at any price, they 
have been too ready to imitate German methods. 
They would make it the State's business to lead up the 
child in the way he should go ; they would provide 
offices where his capacities could be tabulated and 



UTOPIA 67 

his record pigeon-holed, and officials who would find 
him a place, train him to be fit for that place, and, 
whether he liked it or not, put him into that place, as 
though he were all the while not a human being with 
tastes and feelings of his own, but simply a pawn for 
bureaucrats to play with. But though bureaucracy 
is at all costs to be avoided, modern society could 
hardly exist without some regulation of industry. 
There must be opportunities for technical training and 
specialised education, public channels of information, 
and organised facilities for the free movement and 
distribution of labour ; without these it would be just 
as impossible to find work suited to every kind of person 
as to find persons suited to every kind of work of the 
community. It is not enough to assume that different 
persons will have different gifts and different tastes, we 
must also devise methods whereby to discover these 
gifts in individuals and to draw them out where they 
are latent. Above all, we shall need the discipline 
of education to cultivate in men a high sense of duty 
and public service ; for it is only in obedience to these 
higher motives that they would voluntarily undertake 
the more arduous and thankless forms of labour. Nor 
will Education be needed only to train men in the 
right choice and right use of a profession. We must 
educate the public that consumes as well as the workers 
that produce ; for, unless there is a general demand for 
work of the right sort, it is useless to expect that the 
right sort of work will be done. Therefore if the pro- 
ducer's interests are to be safe-guarded, there must be 
a corresponding adjustment of the consumer's tastes. 
Before we can render the former's work a more human- 
ising and inspiring business, the latter must be prepared 
to make some sacrifice, and to pay the cost of such a 
change. For cost there must certainly be — and 
Morris's shrewd insight has not missed it. 

Life in the ideal society which Morris pictured is 



68 NEW FALLACIES OF MIDAS 

marked above all by an austere simplicity of taste. 
His imaginary people take no pride or pleasure in the 
multitude of their possessions ; we find among 
them none of the artificial refinements and elaborate 
mechanism of luxury and comfort, with which writers 
such as Mr. H. G. Wells have chosen to endow 
posterity ; indeed we shall find little enough of the 
cheap abundance and pretentious splendour which is 
the peculiar boast and passion of our own age. In 
Utopia there would be less finery, less furniture, less 
paraphernalia of comfort and convenience. 

But would that after all be any great loss, provided 
that what there was were good ? More than ever are 
we now tempted to spend money on that which is not 
bread, whether as food for the body or food for the 
mind. Such a multitude of new pleasures and novel 
playthings are now within the grasp of all that rich 
and poor alike are beginning to lose their sense of values, 
and to abandon themselves to a materialistic view of 
life, and to confound happiness with pleasure. What 
is it, after all, that makes true happiness ? Is it much 
and cheap, or little and good ? Is it the flaunting 
fashions of novelty and change, or the same old 
pleasures that men of all times and places have 
enjoyed ? Is it a flood of cheap magazines and picture 
papers and sixpenny novels or the well thumbed 
volume of Shakespeare, Tennyson or Scott ? Is it a 
set of hand-made ware, turned by a craftsman and 
treasured through a life- time or is it half-a-dozen cheap 
tea-services broken by as many house-maids in 
succession ? Is it a country walk and a bed at the 
inn, or a whirligig tour through six counties and the 
make-believe comfort of pretentious hotels ? Is it 
a dance on a village green to the tune of a song or a 
fiddle, or is it the discordant mimicry of the gramo- 
phone and the fevered sensations of a picture palace ? 
The true secret of combining poverty and happiness 



UTOPIA 69 

it may yet be ours to discover. Yet it is no new 
secret. The Athenians were perhaps the first to find it 
out and I am not sure that it did not die with them. 
It was Pericles who summed it up in his single 
phrase, cf>iXoKaXovfi€v iier evreXeia^, taste and economy 
combined in one ; love of all in the world worth 
loving* and the simple life. This is what Mr. 
Zimmern has to say of that ideal in his book " The Greek 
Commonwealth." " Greek Literature, like the Gospels, 
is a protest against the modern view that the really 
important thing is to be comfortable. The comfort 
promised by the Gospels (and that enjoyed by the 
Greeks whether the same or somewhat different), and 
the comfort assured by modern inventions and 
appliances are as different as ideals can be. We must 
imagine (he continues, speaking of the civilisation of 
the ancient Greeks) houses without drains, beds 
without sheets or springs, rooms as cold or as hot as the 
open air, only draughtier, meals that began and ended 
with pudding, and cities that could boast neither 
gentry nor millionaires. We must learn to tell the 
time without watches, to cross the rivers without 
bridges and seas without compass — to study poetry 
without books, geography without maps, and politics 
without newspapers. In a word (if we are to realise the 
Greeks) we must learn how to be civilised without 
being comfortable. We must go behind the Industrial 
Revolution. The older Greeks did not want to be 
rich for the sake of riches. They only desired riches 
when they had convinced themselves that riches were 
necessary to social well being. They knew, as some 
Eastern people know still, that " a pennyworth of ease 
is worth a penny," and that it is not worth while 
spending two pennyworth or more of worry and effort 
to attain it. That is precisely the spirit of Morris' 

* The Greek word Ka\6s implies so much besides aesthetic beauty 
that it is impossible to find one English word whereby to render it. 



70 NEW FALLACIES OF MIDAS 

Utopia, and what its lesson may be for the world of 
to-day is well worth consideration. Perhaps neither 
Morris nor the Greeks were very far from the truth. 

First of all then, in our pursuit of social happiness, 
we shall consider, not whether a thing is desirable to 
consume, but whether it is desirable to produce, and 
when Morris said that there are some pieces of work 
too disagreeable or too troublesome to be worth while 
performing, we shall agree with him. No man has the 
right to endanger the lives or health or happiness of the 
workers for his own selfish ends ; and the sooner we 
cease to do so the better for their welfare and for our 
own peace of mind. In this matter indeed the con- 
sciences of men have been a little stirred already. We 
do not now send women down coal-pits, or employ 
children of tender age in factories. Laws have been 
passed restricting or forbidding some dangerous pro- 
cesses, and insisting on healthier conditions for others. 
Because pottery-making of the normal type is injurious 
to the workers, the public is encouraged in the use of 
pottery with a leadless glaze. But, as a rule, we 
enquire too little into the circumstances of manufacture, 
and do not care to be told that our pet luxury is pro- 
duced at the cost of the happiness of somebody else. 

Furthermore, we shall consider not only what 
character of work is most injurious but what work 
is most beneficial to perform ; and here too Morris, 
I think, struck the right note, in insisting on the 
superiority of work done by hand over work done by 
machine. If such work is more costly to produce, its 
greater permanence and artistic value is more than 
sufficient compensation ; and while the worker gains 
in the truer pleasure and interest of producing it, the 
consumer also gains a truer satisfaction from the 
product of the other's enthusiasm. None the less it is 
more than a little doubtful whether we can afford to 
dispense altogether with machinery, unless indeed we 



UTOPIA 71 

are prepared to put back the clock a hundred years and 
to forgo three quarters • of our present prosperity. 
Arts and crafts may already be receiving more recog- 
nition and encouragement, and agriculture may be 
restored to its rightful place in our national life ; but 
for the most part Morris's ideal must be acknowledged 
to be impracticable. Machinery has come to stay ; 
and our business is not to put the clock back but to put 
it forward, not to abolish machinery but so to develop 
and perfect its uses that the grinding monotony and 
discomfort of the machine minder's work may be as far 
as possible relieved and lightened. Mechanical science 
is already making great strides in this direction. Until 
recent years for instance, the cotton spinning machine 
was so arranged that if a single thread snapped, the 
spinner was forced to stop the machine by hand and at 
infinite pains uncoil the threads in order to recover 
the broken end. Now the machine is automatically 
stopped directly the break occurs ; and the saving of 
time and trouble to the spinner may well be imagined. 
And other inventions and improvements of the sort 
will do much to ease the workers' burden, and after 
all, monotony is not confined to the process of 
machinery ; there is Hood's poem to remind us that 
purely manual labour can also be monotonous, and 
that there is no slavery like the slavery of the seam- 
stress. A machine minder whose business calls for 
some technical knowledge and a skilful hand with 
screw-driver and bolt, may well take a real pride and 
pleasure in the manipulation of his engine. The chief 
source of weariness arises from the absence of variety 
and change, and for this the remedy is not far to seek. 
In some countries it has been already applied, and 
instead of keeping one man or woman to the continuous 
performance of a single process, employers allow them 
to go the round of the shops, thus keeping alive an 
interest in their work and increasing their efficiency to 



72 NEW FALLACIES OF MIDAS 

boot. Yet there must remain some kinds of 
labour whether done by machinery or hand which are 
too wearisome and soulless for a life time's work, and 
wherever improved machinery cannot provide a 
solution of this problem, it is not impossible that 
Morris's suggestion might hold. The young and 
stalwart might be drafted into such labour for a year 
or so at a time ; and the time thus spent on the roads 
or in the mines would be no bad discipline and training. 
Ruskin once led out a band of undergraduates to make 
a road near Hinksey, and a very bad road they made 
which remains there to this day. But they enjoyed the 
experience ; and such labour would perhaps be no 
more irksome than the military training which most 
countries now enforce. 

Last and not least, work which takes too much of a 
man's time is almost as seriously to be condemned as 
work which is downright unhealthy, unwholesome 
and monotonous. To spend, as many labourers do 
to-day, twelve or more hours out of the twenty-four 
on work which simply exhausts the body and does not 
exercise the brain, is not the purpose for which man 
was made. The people of Nowhere, we may note, were 
a leisured people. They could find time (as perhaps 
men should), to leave their bench for a gossip or to 
drive a neighbour into town. But, what is more, they 
knew how to use their leisure well ; and this is a side 
of life which we to-day neglect too much. It is no use 
pleading for an eight-hour or six-hour day for all 
(and with the rapid improvement of machinery this is 
not beyond the realm of reasonable prophecy) unless 
the time so saved is well used and not wasted. Here 
again the true solution lies in a wider and deeper 
development of Education, not Education of the schools 
only, but such as will not cease at fourteen nor at 
eighteen nor even at twenty-three. Such modern 
movements as the Workers' Educational Association 



UTOPIA 73 

have shown already what can be done among the adult 
workers, and have discovered among the unlearned 
artisans an intellectual energy which puts the cultured 
class to shame.* We may, as yet, have no dustmen who 
write novels ; but tramps and sailors do ; and the days 
may yet be coming when rustic Shakespeares will 
write tragedies and act them on village greens, when 
coal-heavers and chimney-sweeps, their day's work 
ended, will sit down to study algebra or natural 
history, or to carve themselves a sideboard or a mantel- 
shelf, when in short, a man's true life will centre in his 
voluntary and not in his necessary labour, in what he 
does for the love of it, and not in what he does to earn 
his daily bread. 

Yet it must not be lightly assumed that the ideal 
which is here foreshadowed would impose less tax 
upon man's energies as a whole, or that simple tastes 
are altogether easy tastes to satisfy. The unpre- 
tentious beauty of plain dresses or simple furniture 
is often the most expensive to procure ; it costs a far 
greater effort to paint by hand a single masterpiece 
than to turn out half a million of cheap prints, or again, 
it is easier to erect a row of mansions upon a uniform 
and settled type, than to build a cottage which will 
combine the highest ideals of utility and beauty. So, 
before the simple life can also be the happy life, we must 
plan its smallest details with elaborate care, eliminating 
needless labour by all manner of devices, and adapting 
every article of use to the most eihcient performance of 
its function. And, whatever its difficulties, the task 
will be worth while ; for the consumer no less than the 
producer it is from the simple rather than the complex 
that the highest satisfaction is to be gained. In life, 

* The W.E.A. is an organisation of 200 branches, which provides of 
weekly lectures and debates for 11,000 working men and women. 
It is undoubtedly one of the most striking educational experiments of 
history. 



74 NEW FALLACIES OF MIDAS 

as in art, elaboration is only a step towards a new and 
grander simplicity of design ; for complexity of itself 
cannot bring satisfaction ; harmony and harmony alone 
can bring us that. Now modern life is not harmonious ; 
in innumerable ways its various sides conflict with one 
another. The town- dweller who has a taste for natural 
beauty, must make a tedious journey in an unsightly 
train before he can gratify his taste ; does he crave 
mental relaxation, he must take his place among a 
crowd of strangers in the restless glare and tainted 
atmosphere of a concert-hall or theatre ; or is it merely 
a matter of reaching his home at night, he must travel 
in a subterranean railway and be hoisted up to the 
fifth storey flat in a jerking lift. In other words the 
means of satisfaction are very ill-adapted to the end. 
But in Utopia all this would have been changed ; its 
citizen will find natural beauty in the garden lying at 
his own front door ; music and other arts he will enj oy 
in the company of friends, relying (for in Utopia artists 
will be numerous) upon the resources of his own or 
others' skill. When his work is over, he will still have 
the zest and vigour to return on foot to a house of 
moderate size which at least he can call his own. In 
the quest for happiness this present age employs a 
thousand make-shifts* that satisfy no one, and explores 

* In many respects, however, we are heading in the right direction, 
for we are all the while getting more simplification along with greater 
complexity. Let me take an instance. The roll-top desk at which 
I write is far more simple whether to make or to use than the bureau 
in the next room. In the bureau the drawers work stiffly : and seeing 
that they are of all shapes and sizes, the maker must have constructed 
each at haphazard as he went along. The drawers of the desk on the 
contrary are all made upon a fixed standard of measurement, and they 
perform their function to perfection. The result is an economy of 
labour both for the craftsman and for the writer. But the roll-top desk 
is out of harmony with the other furniture being ponderous and 
unsightly. The labour saved by superior methods of construction 
might therefore have been expended to advantage, if more trouble 
and thought had been given to the proportions and appearance of the 
desk. In Utopia bureaux will be as serviceable as roll-top desks, and 
roll-top desks as beautiful as bureaux. 



UTOPIA 75 

a thousand tracks which lead it nowhere. But when 
men come to understand both what their true needs are, 
and by v/hat means those needs can best be satisfied, 
then it will be strange indeed, if the complex civilisa- 
tion in which we live has not been superseded by a 
simpler and more harmonious way of life, in which the 
needs that men feel are fewer,the means to their satisfac- 
tion more direct and so the resulting happiness more 
lasting and complete. 

(iii.) 

To ourselves, living as we do in the midst of so much 
strife and self-seeking and distress, William Morris' 
ideal may well seem too daring in its aspirations, and too 
visionary in its almost childlike faith in human virtue 
and human happiness ; yet no ideal would be worth 
having that was otherwise. If we set our compass 
lor the Happy Isles, it is not with the expectation of 
arriving there to-day, nor yet to-morrow. It is 
enough to know that there lies our goal, and to be 
assured that at least we are not steering direct for their 
antipodes. If such a society as Morris pictured could 
ever be realised on this earth, it certainly will not be 
reached at a single bound ; and granted that we step 
by step are moving in the right direction (and in many 
ways we have some reason to suppose that we are), 
that is at once both a ground for optimism and a proof 
of Morris's farsightedness. There is, however, one side 
to his system to which I have hitherto made no allusion. 
Among the people of his ideal there was no money, no 
private property, no trafficking for gain ; they were 
Communists out and out. When, for example, the 
Guest asked a shop-girl for tobacco, she pressed upon 
him a pouch and a pipe as well ; yet would not take a 
penny in return. In short, the citizens of Nowhere 
laboured their hardest and gave their best, careless 



76 NEW FALLACIES OF MIDAS 

whether they should receive as much again. Here 
indeed is a way of life so utterly strange and foreign 
to our own habits, that we feel as though the ground 
on which common mortals tread had been swept away 
from beneath our feet. Of Morris's other notions we 
found some at least to be not utterly impracticable and 
some to be partially realised already. But this is a 
transformation of human character, of which in Morris's 
day at any rate the world contained no promise, 
hardly even the shadow of a hint. There was never 
a time when business was more keen or competition 
fiercer. Even to-day, though ideals are swiftly 
changing, money is still the standard of success, and the 
passport to social or political advancement. Private 
property and the principles of credit and exchange are 
still the very corner-stones of our social and economic 
edifice. 

Hitherto throughout the preceding chapters of this 
book, we have considered the world, not as a compound 
of warring and jealous elements, but as though it were 
one great family, confronted with the single problem of 
supporting life, and meeting it with a united effort 
and a common will. But, look at the world how you 
will, this is not the actual condition of affairs. You 
will not find unity and mutual service, but division and 
self-interest ; not generous emulation, but bitter 
rivalry ; not co-operation but suicidal competition. 
Commerce is a battle in which tradesman is matched 
against tradesman, merchant against merchant ; and 
every man's hand is against his neighbour, nor does 
the antagonism stop with individuals ; whole classes 
are now set at variance, and are busy marshalling their 
legions for the fight. Artisans have combined to 
challenge the power and authority of the capitalist, 
and the capitalist on his part is not minded to yield 
without a struggle. Nations too are entering the lists ; 
and economic warfare is invoked to finish the work 



UTOPIA 



11 



begun by battle-ships and cannon. The principle of 
Free Trade at least put the produce of each nation at 
the service of them all, thus leaving every country to 
make that contribution to the common stock which the 
abilities of its people or the resources of its land best 
fitted it to make. But the nations would not have it 
so ; and must needs set up protective tariffs, and each 
seek prosperity behind the artificial stronghold of its 
own ring-fence. 

Now in Morris's tale there were neither national 
frontiers nor national causes and much less national 
feuds. Each country lived with its neighbour as 
peacefully as England lives with Wales, and there were 
indeed no national governments to pick a quarrel, nor 
national causes for quarrel. And when this is said, it 
is plain that we must here part company with this 
romantic dreamer, for events have happened since his 
day which he would have deemed incredible, and 
between our world and his Utopia there is fixed a gulf 
wider than theories or prophecies can bridge. 



PART II. 

Chapter VIII. 

VALUE. 

It is the business of all good prophets to dream dreams ; 
and pleasant rosy-coloured dreams let them by all 
means be, if they can give us better hopes for our own 
happiness or a better confidence for the future of the 
world. The economist's business is more prosaic. He 
must face the facts, whether pleasant or unpleasant, and 
take the world as he finds it. Men are not all saints or 
archangels as yet, and that they will ever be so appears 
in the last degree unlikely. In the meantime, to us of 
the twentieth century, the moneyless country of 
Morris's imagination seems as fantastic as a scene out of 
fairyland. We should be as little surprised to meet a 
giant marching down Watling Street in seven-league 
boots as to find a tobacconist who would lavish pipes 
upon us gratis. Such disinterested generosity is not 
the way of the world as we know it ; and just as men 
and women bought and sold in Noah's day, so they 
have been buying and selling ever since. Only once 
and again throughout the course of history have there 
been brief departures from this universal code of 
commerce. The early Christians, to name one of 
them, " had all things in common " (though even they 
sold their goods without compunction to those who 
were not of the faith). Once too, on the inhospitable 
coasts of New England, our Puritan settlers made a 
similar experiment. It ended in utter failure, and not 
until this quixotic policy had been abandoned, did the 

79 



8o NEW FALLACIES OF MIDAS 

colony begin to thrive. Other attempts, whether due 
to religious zeal or philanthropic enthusiasm have had 
no better success ; they have lingered for a time and 
passing have left no mark upon the world. After two 
thousand years of Christianity, the society for which 
Morris wrote was more and not less the slave of 
money, than were the societies that had gone before. 
Men were governed, not by the precepts of the Sermon 
on the Mount, but by the rules of high finance. Their 
gods were not the kindly spirits of benevolence and 
mutual service ; they were the grim deities of com- 
petition and distrust ; their temple built upon a 
foundation of hard cash ; the victims sacrificed at 
their altar dupes, bankrupts and ruined creditors ; 
and written large across its stones the uncompromising 
legend, " Nothing for nothing here, and precious little 
for sixpence." 

And as yet, all this is not greatly changed ; so that, 
for the present, it would appear, and on into the 
future as far as most of us can see, we must accept this 
as the rule of human action, that men will give only 
upon the condition that they shall receive at least as 
much again. Whether it be goods or money or services 
that we offer to our neighbour, we are never satisfied 
with less than an equal value in return (or, what, at 
any rate, appears to ourselves equal value ; for even 
poor Moses Primrose imagined in his folly that his 
gross of green spectacles was a capital bargain for his 
horse). Whenever then two men strike up a bargain, 
and agree to an exchange of goods, each of them is 
parting with something that he has, in order to acquire 
some other thing that he has not ; and whether he be 
satisfied or no with the terms of the bargain, he must 
assuredly believe that what he gains by the acquisition 
compensates to him at least for what he gives up ; else 
as a free agent, and possessed of his proper senses, he 
would never have concluded the bargain at all. He has 



VALUE 8i 

weighed the balance of advantage in his mind and has 
not found it wanting. In every act of barter, such 
an equation or balancing of values is implied ; and 
before we can grasp the meaning of exchange, we must 
decide what value is. — ^ 

Value is a term common enough in daily use ; yet/^v^ 
as in the case of wealth, it is none too easy to define. 
One thing however we may state at once. Value is not 
an absolute or permanent quality in things. A thing 
ceases to have any value, as soon as men cease 
altogether to want it ;* the picture which to-day 
fetches a thousand pounds at Christie's, may a century 
hence be consigned to the lumber room as rubbish. 
Values change as men's tastes change ; and different 
people set different values upon the self-same thing. 
Thus the famous pills which in the maker's own estimate 
are well worth a guinea a box, are to be bought at any 
chemists for the sum of thirteen pence. Nor for that 
matter must it be concluded that money is a true 
measure of value. For the value of gold and silver 
itself changes and has fluctuated in the course of a 
thousand years far more than the value of the German 
mark has changed in the course of three. In Solomon's 
time the very abundance of silver sufficed to make it 
cheap ; and in our own day the same influence is still 
at work. Silver having become a drug on the market, 
a currency such as the Chinese tael has depreciated 
accordingly ; and financiers tell us that the same is true 
(though less decisively and less continuously) of gold, f 
At best we can but say that the value of these rarer 
metals is the least liable to change, and that therefore 

* It may of course retain a potential value, but what is merely 
potential is not fact. 

f To be exact, the influence of gold production upon prices does not 
proceed directly from the law of supply and demand ; but is due 
to the effect which an increase of currency has upon credit, that is, on 
men's com-mercial confidence. Other factors may therefore enter in 
which will restore prices to their previous standard. 



82 NEW FALLACIES OF MIDAS 

we have in them a convenient and fairly stable standard 
by which to measure other values. 

For value itself, like height or weight or solidity, 
is merely a measure by which two or more different 
things can be compared. When, for instance, we say 
that a motor-car is cheap, we are making a mental 
comparison with other motor-cars which are dear ; 
or when we speak of precious stones we are thinking, 
though we may not know it, of other stones which are 
not precious. More especially is a comparison implied, 
when we come to make an actual purchase or exchange ; 
for then a positive and concrete value is assigned to 
what we buy ; and a definite preference for one thing 
over other things declared. A simple illustration will 
make this clear ; and (since the intrusion of money only 
serves to obscure the issue), let us take the illustration 
from a country where the use of money is unknown, and 
where all trade is done by barter. Let us suppose then 
that a native of this benighted country proposes to do 
a day's work for a neighbour. In return for this 
service he expects of course some definite reward ; but 
what reward he will receive is within certain limits a 
matter of his personal choice. It is open to him let us 
say, to demand a loaf of bread, or a pair of chopsticks 
or a nose-ring or an assegai, and much else besides. 
After due reflection he elects the nose-ring and 
thereby he declares his preference for this particular 
satisfaction as against other alternative satisfactions 
not excluding the satisfaction of taking a holiday and 
doing no work at all. If the neighbour agree to the 
deal, and the bargain then goes through, he has given 
both to his day's work and to the nose-ring a value 
relative to all rival satisfactions that lie at his comm.and. 
Now, in every act of exchange the same takes place. 
A comparison is proposed ; a preference is declared. 
By the sum-total of all such declared preferences tne 
world's scale of values is formulated ; yet in everj/ fresh 



VALUE 83 

declaration of preference the scale of values is mentally 
revised, weighed in the balance and fixed, as it were, 
anew. 

Now, if the preferences of men were stable 
and constant, values would be constant too ; but values 
are variable, as anyone can see ; and for the simple 
reason that preferences are also variable. Why prefer- 
ences should so vary, it must now be our business to 
inquire. 

Let us take an illustration once again. It is my habit 
(being a man of simple tastes) to drink water from the 
local spring, and every day I journey thither to fetch 
a pailful and supply my want. In other words I prefer 
the trouble of a single journey (but not more than a 
single journey) to the pain of leaving my thirst unsatis- 
fied. Now there comes a hot summer ; my thirst 
increases ; and I decide that it is worth while to fetch 
two pailfuls from the well instead of one ; so it requires 
a double journey and a double sacrifice of energy and 
time to allay my tiresome thirst. In short, because my 
desire is more intense its satisfaction costs me dearer. 
As however the season advances, a drought sets in ; 
and when at last the cooler weather has returned, I find 
my well dried up. I am now content with a single 
pailful, but I must travel twice the distance to reach the 
nearest spring. Once again the satisfaction of my 
want is attained at tv/ice the former cost ; but this time 
it costs me more because it is more difficult to supply. 
In both cases I prefer the alternative of a double journey 
to the pain of unsatisfied thirst. The cause in the one 
case, is an increased desire, the cause in the other an 
increased difficulty of supplying it. Here then, are 
two different influences at work, the influences of 
Demand and Supply, and it is by balancing these two 
influences in the mind the one against the other, that 
all preferences whatsoever are determined. In other 
words, when I know how much I want a thing, and 



84 NEW FALLACIES OF MIDAS 

also how hard it is to get it, I know just what it is 
worth to me. Then I can say " so much labour I will 
give for it or so many pence, but not a stroke of labour 
or a penny piece more." 

Value then is fixed by the interplay of these two 
factors, supply and demand. Neither of them is alone 
sufficient to determine the value of a thing. Intensity 
of desire will not of itself make a thing dear. The 
strongest desire which can exist in man is the desire 
for food ; yet food is cheap compared with diamonds, 
simply because to supply the one is easy, to supply the 
other difficult. Nor on the other hand are difficulties 
of supply enough to raise the value, if the demand is 
wanting. The first edition of some obsolete epic 
may be as rare as diamonds, and, if there were a large 
demand for the books, it could never be supplied. But, 
since nobody has much interest in possessing them, they 
are priced at half-a-crown and placed on the book- 
seller's back-shelves. From these two instances it 
should be clear that value is fixed not by supply alone 
nor by demand alone, but by both in combination. 
They are complementary to each other like the two 
scales on a sliding-rule. On the one side, value has a 
tendency to rise as demand goes up, and to fall as 
demand goes down ; on the other side it is exactly 
the reverse. And the actual price that a man will 
pay, is determined by the point at which the two scales 
meet. For then the measure of his desire is exactly 
equated to the measure of his sacrifice ; the satisfaction 
coincides with the trouble that it costs.* 

In the world's markets, just as in the individual's 
case, the twofold influence is constantly at work. 

* It is of course true that when I buy a ton of coal, the trouble of 
procuring it is not mine but the collier's. But, it must be remembered 
that I give him something for the coal, and, in the last resort, this must 
represent an expenditure of energy on my part which in some way is 
equivalent to his. The case of enjoyment which I do not earn by 
personal trouble shall be considered hereafter. 



VALUE 85 

There the sum-total of the producers' difficulties 
regulates the amount of the supply, while the sum- 
total of the consumers' desire for satisfaction regulates 
the intensity of the demand. But because production 
depends on human energies, and consumption on 
human desires, and because desires and energies react 
upon each other, there is a corresponding interaction 
between the amount of supply and the intensity of 
demand. If supply increases, demand is almost sure 
to follow suit. When the price of tea is half-a-crown, 
my monthly allowance is no more than a pound ; but 
when tea is plentiful and the price falls to one and six, 
I shall double my allowance and thus my demand will 
have increased, the cost of its satisfaction being enlarged 
to the length of sixpence. In the same way demand 
will have its influence on Supply. When the manu- 
facturer perceives that the public wants more boots 
than it actually gets he does not maintain his out-put 
at its former level and take advantage of increased 
demand by putting up the price, he will augment his 
out-put even though the increase of supply will lower 
the value of the boots. So in general the best way to 
stimulate production is to increase consumption, and 
the best way to stimulate consumption is to provide 
men with plenty to consume. To the action and 
reaction of these two complementary economic forces 
there is no discoverable end. 

There is however a tendency in human nature 
(common both to producers and consumers alike), 
which in some measure limits and impedes the natural 
and free development of these economic laws — I mean 
the tendency to standardise values. A doctor's fee 
is a guinea and neither more nor less, whether I call 
him in to save me from death by poison or to lance a 
painful corn. Books of the same quality and size are 
more in demand at London than they are at Manchester, 
bicycles may be are bought more freely in Denmark 



86 NEW FALLACIES OF MIDAS 

than they are in Sweden ; yet the price remains the 
same in one place as in the other*. Or again, a lady 
who goes shopping will refuse an article the price of 
which has risen, not be cause the price is beyond her 
purse, nor because it is more than the article is worth to 
her, but simply because she regards the price as unusual, 
exorbitant, unfair. In one and the other case, the 
producer or consumer is endeavouring (for whatever be 
his or her own reason) to maintain prices at their normal 
level. Partly perhaps, this tendency is due to an 
innate conservatism which clings to the conveniences 
of custom ; for men are the slaves of habit, and will 
continue to charge a price or accept a wage, long after 
the wage or price have lost all relation to the actual 
conditions of supply and demand : but even more it is 
due, I think, to a sense of corporate loyalty, a certain 
esprit de corps, which will not allow a man to outbid 
or undersell his neighbour. When the village milkman 
refuses to take advantage of a local and temporary 
scarcity of milk it is because his sense of decency forbids 
the exploitation of his neighbour's need. For a 
similar reason he does not try to increase his custom 
by lowering the price of his butter simply because he 
does not wish to steal a march on rival farmers. 

Let us not be mistaken. Values are fixed and 
preferences determined not by soulless cipher-mongers 
and abstract formulae, but by human beings with 
human virtues as well as human weaknesses. Ex- 
changes are not always made (as some theorists 
have fancied) in a spirit of calculated self-interest and 
cold intelligence. In business, as in other spheres of 
life, men are swayed by a variety of passions, fancies and 
ideals. These have their origin in part in the defects of 
our wisdom or our will ; such are the errors of a hasty 

* If we allow for the addition to the price which is due to the cost 
of transport, this standardisation of prices would be found to have a 
far wider application than might at first appear. 



VALUE 87 

or deluded judgment, baseless fears of scarcity or hopes 
of plenty, imaginary doubts of others' honesty or 
unreliective assurance of our own, easy-going adher- 
ence to fashion, custom or tradition, love of notoriety 
or dread of public censure. Other motives are more 
worthy ; pride in good craftmanship, sense of honour, 
loyalty and fair-play, even the softer impulses of 
charity and pity ; these also play their part. There 
are a thousand springs of human action which defy 
scientific analysis, and interfere with the working of 
purely economic laws. And indeed, when we speak 
glibly of a " fair price '* or a ** just wage " v^e little know 
how much is presupposed in such a phrase. To assess 
the ideal value of a single thing would call in reality 
for a man possessed not only of perfect taste, but of 
complete omniscience and absolute integrity as well. 
Even then it must not be forgotten that it takes two 
to make a bargain, and if a pair of such paragons were 
ever found, they would probabl}^ prefer the more 
generous methods of the Utopian people or of the 
Early Christian Saints. 

Nevertheless we know that with the best will in the 
world no modern state or society could exist for a day 
upon that simple-minded pattern; The working of our 
industries and great commercial houses by which 
crowded cities and scattered colonies are now supplied, 
would be impossible without the widespread net- 
work of credit and exchange which is the arterial 
system of the economic world. And, were sorae 
sudden catastrophe or revolution to destroy credit 
and check the flow of markets, then disaster would 
as surely follow as death must come to the body 
when the circulation of the blood is stopped. Exchange 
then must continue, if men are to live in decency and 
comfort ; and for a standard of exchange we must 
further have money tokens. So long therefore as 
this is the way of the world, men will retain their 



88 NEW FALLACIES OF MIDAS 

power to profit by each other's ignorance or need; 
salesmen will be able to' exploit their customer's 
credulity ; in every deal there will be opportunity 
to haggle, bluff and over-reach. Yet in the long run 
such methods will bring no permanent advantage; 
they are bad business as well as bad morality ; and 
immediate gains can never compensate for a tarnished 
reputation. For at bottom all trade is built upon 
a basis of mutual trust and reciprocal good- will. 
The more each party to a bargain is persuaded of the 
other's honesty of purpose, the more willing will each 
be to make the venture, and thus the more will the 
volume of the trade swell and prosperity be increased. 
Men will naturally prefer to deal with those who make 
it a point of honour to give value for value, laying all 
their cards squarely on the table, and offering their 
goods for precisely what they are. Nor will the fair 
minded man of business seek to conceal his profits (not 
even from the men whom he employs) ; for the profits 
he demands will be in accordance with the services 
he has rendered and the risks he has run. There can, 
it is true, be no hard and fast canon of economic 
justice ; but equity there certainly can be. Given 
sufficient knowledge, we can tell what price is fair 
and what unfair, what profits are reasonable, and 
what are not. This is a truism to-day. The last 
half century has witnessed a great change in the ethics 
of the markets ; " caveat emptor " is now a discredited 
motto ; open dealing and frank publicity is the recog- 
nised code of all reputable traders, nor is there any 
lack of generous or even altruistic effort in the business 
world. Yet much remains of which we have small 
reason to be proud. Profiteering which is discoun- 
teranced in war-time, is still considered by many to be 
legitimate in peace. There is plenty of dissimulation and 
sharp practice which is every whit as vicious as open 
fraud. But, though money must for all time be the root 



VALUE 89 

of many evils, it is not by abolishing money that we can 
hope to be rid of them. The old rules of commerce 
must still stand; only they must be observed in 
the spirit of liberality and fair deaUng, rather than 
according to a niggardly interpretation of the letter. 
We must substitute a positive zeal for justice where 
we have been content in the past with a negative 
avoidance of its breach. 



Chapter XI 

MONOPOLY. 

The mathematical novice, who aspires to probe the 
mysteries of gravity and motion, is introduced at the 
outset of his studies to a strange world, in which 
ponderous bodies glide and swing untrammelled 
through spaces completely innocent of friction. But, 
mathematics being as it is an abstract science, the theory 
of dynamic laws fits very ill with fact ; friction exists 
in all known spaces and in all known things ; and the 
movements of natural objects are found by the novice 
to be after all no better than loose approximations 
to the mathematical ideal. How much more then 
fact must play havoc with the vaguer formulae 
of economic science, will be readily understood. Here 
there will be obstructions, hindrances, impediments 
of every sort and kind. The. vagaries of human | 
intellects and human passions will, as we have seen, 
defy our most careful calculations. Political forces 
too will interfere with even more visible effect. A 
Government places a tax on foreign imports and the 
natural currents of supply are interrupted at a blow ; 
artificial limitations are imposed upon the price of 
jam or sugar ; and the whole basis of evaluation will 
be completely undermined. In short, if we would hope , 
to see our economic laws hold valid, and the rise and i 
fall of prices correspond at all nearly to the ideal 
principles of supply and demand, then we must do, ■ 
as the mathematicans do, and banish friction, or at ; 
least, so far as we may, reduce it to a minimum. ■ 

90 I 



MONOPOLY 91 

External and obstructive influences must be elimina- 
ted, if the economic machine is to have free play 
and its wheels run smoothly. Now the solvent that 
can best ease them in their working, is liberty of 
competition ; and the obstacle which clogs them most, 
is its reverse and opposite, monopoly. 
IpThe monopolist is the autocrat of the market place ; 
whether the use he makes of his power be wise 
or unwise depends on circumstances ; but in any case, 
like his political counterpart, he is seldom trusted. 
For his power is a kind of blank cheque on human 
patience ; and mankind is not unnaturally suspicious 
of an overdraft. We may suspect that the first man 
who attempted a " corner'' in food, was lynched by 
his neighbours without shrift or ceremony ; and, 
though he himself may have had no intention of 
starving them at all, they were at any rate acting on 
the safe side if they did not wait to see. Indeed there is 
something unnatural in this attempt to cut the channels 
of supply and hold the world to ransom. So, v^henever 
men have been politically free, they have suppressed 
monopolies severely. It is only when the authority 
of law has been perverted from its proper uses, that 
this dangerous power has been allowed to pass into 
the hands of individuals. In Stuart and Tudor times, 
for instance, the Crown dispensed monopoHes in soap, 
or linen or tobacco, as a mark of royal favour or for 
the filling of the royal purse ; but with the growth of 
democratic institutions, the practice was disallowed, 
and now, while Government may itself assume 
unique control of such pubUc services as the telegraph 
or the . post, or grant a privileged position to private 
companies (such as those which own the gas-works 
or the railways) under very definite restrictions, yet in 
other spheres its authority is no longer exercised m 
favour of private monopolies, but in the interests of 
free competition. 



92 NEW FALLACIES OF MIDAS 

But, though monopoly, in the more strict and 
literal sense of the word, has seldom been long tolerated 
in free countries, it has often existed in disguised or 
partial forms. Two types are chiefly to be noted ; 
and of these the first is one which we may call the 
monopoly of collusion. Now, whatever else com- 
petition may imply, it certainly implies that each 
competitor should do his best to outstrip rivals. 
The race in which the favourite agrees with his adver- 
sary to run a dead heat, is no race at all ; and similarly 
it is required of competitors that at least they should 
compete. If all the producers of some article which 
is necessary to the consumer agree to make common 
cause they have the consumer completely at their 
mercy ; for the monopoly of twenty or two hundred 
resolute men is no weaker than the monopoly of one. 
Such unions, appearing recently under the name of 
Trusts, , Combines or Trade Rings, have usually been 
defeated or at least restricted in their operation. 
But, though open attempts at combination have in 
general been discountenanced by law, there is nothing 
to prevent manufacturers or merchants from forming 
some mutual understanding on the sly. Indeed, 
without the least intent to act unjustly towards the 
public, it is not unnatural if realising the community 
of their interests they should come to feel a certain 
instinct of loyalty towards one another. But whatever 
the motive of their co-operation, there can be little 
doubt that it may gravely prejudice the free play of 
the competitive market, and that the level of prices 
may be artificially sustained at the consumer's expense. 
The liberty to unite, like all other liberties, is only 
legitimate so long as it is not used to the public detri- 
ment ; and it is sometimes forgotten, even by the 
most ardent champions of liberty, that a group ma]/ 
misuse a monopoly as well as a person ; a hundred 
thousand pitmen who agree to go on strike may be 



MONOPOLY 93 

exercising a power no less tyrannical than the millionaire 
mine-owner who makes a corner in coal* 

There is a second form of virtual or disguised mon- 
opoly which we may call the monopoly of isolation ; 
and here at any rate it is nature and not man that 
is to blame. The world has not been so arranged as 
to make competition easy ; and the artificial restraints 
to which we have just alluded, are slight as compared 
with the physical and geographical impediments. 
Now-a-days, oceans, lakes and rivers are considered an 
aid to commerce ; but they have often been equally 
a hindrance. Islanders have had to suffer the penalty 
of their position ; it does not benefit them that timber 
should be abundant on the mainland if there are no 
boats large enough or strong enough to bring it over. 
So the man who owns the one plantation in the 
island, will be a monopolist as much as if it were the 
one plantation in the world. That is an extreme 
instance ; and local monopolies of so complete a 
character are rare ; but so long as space exists and the 
difficulties of transportation are incompletely met by 
man's contrivances, competition cannot become 
entirely free. Even, as things stand to-day, agricul- 
turalists are generally dependent upon a single railway 
for the conveyance of their produce, and were it not 
for the protection of State interference, they would be 
at the mercy of a monopolist company which could 
raise freight-dues at its pleasure. Much more were 
men liable to exploitation in the days before steam and 
motor transit was invented. Then, competition was 
limited to narrow areas ; and where states and cities and 
even villages lived in economic isolation, and were for 

* It is obvious that " co-operation " of this sort, used for the benefit 
of the few and to the detriment of the many, has nothing in common 
with the co-operation of the beneficent sort, which is used for the good of 
all. Furthermore, just as free competition is preferable to monopoly 
which is misused, so true co-operation may be better than competition 
that is carried to excess. 



94 NEW FALLACIES OF MIDAS 

the most part dependent on their own resources, the 
opportunities of local monopoly were far greater than 
in these days of world-wide commerce and cosmo- 
politan finance. The miller who had sole possession of 
the local stream could afford to snap his fingers 
at competitors in the next valley, if a range of steep 
mountains lay between them ; even a doctor need 
have little fear of rivals, the nearest of whom lived 
fifty miles away. And if in the Middle Ages the power 
of monopoly was used with moderation, whether by 
individuals or by the Guilds-men groups, this was 
chiefly due to a sense of neighbourliness and civic 
loyalty, partly perhaps to a dread of public censure. 
For under the conditions of those days, the results 
of misused monopoly were far more obvious and glaring 
and the popular reaction against it far more swift. 

Competition then, whether in past or present, 
has never been entirely free from the two-fold inter- 
ference of isolation and collusion. Monopoly, under 
one disguise or another, is perpetually creeping in ; 
endured may be for a while, but in the end almost 
certainly defeated. Yet monopoly, even while it 
lasts, is not of necessity the dangerous power it 
would appear. Not every monopolist can press his 
advantage to the full ; nor would such a course be 
to his interest. It does not pay to put up the price 
of goods, if the consumer is thereby deterred from 
buying them. Few people, for instance, would care 
to pay a pound apiece for pineapples ; and if a man 
who had cornered tropical supplies, attempted to 
extract that price, the demand would automatically 
cease ; the monopolist would find no market for his 
fruit. It is only when a monopoly is held over the 
more immediate necessities of civilised existence, 
that the power is likely to be seriously abused. A 
monopolist, let us say, in corn, or meat or cotton 
might prove an intolerable despot ; the case of iron 



MONOPOLY 95 

or coal would be as bad ; but without doubt the most 
formidable of all is the monopolist of land. Land is, 
as we know, the source of all production ; the owner 
of it controls not the supply of food and clothing 
only, but of minerals as well. He can do more than 
interrupt the normal flow of markets ; he can, if he 
chooses, empty them altogether. And, if his monopoly 
is complete and exclusive, he is in truth a very 
dangerous person. 

Now, although the social and economic changes of 
the last few hundred years have made such monopolies 
in land well nigh impossible to-day, there have been 
times when they existed, and when their influence 
upon society was incalculably great. The isolation 
of mediaeval communities, to which we referred above, 
put into the hands of the large land owners a power 
which was almost unlimited. By means of it, the 
feudal baron was able to reduce his neighbours to the 
condition of helpless serfs. He controlled the sources 
of all livelihood, he could ask what terms he pleased 
for the right of access to them ; in fact, he held a 
monopoly of the strictest sort and did not scruple to 
use it. The social and political privileges which he 
enjoyed, were built in part upon the basis of this 
economic supremacy, and these were in their turn 
employed to reinforce it. For not content with the 
advantages of natural isolation, he endeavoured to 
increase his hold over the servile classes by open collu- 
sion with his brother barons who were also his possible 
competitors. Laws and customs were evolved by 
which a peasant was denied the right of quitting the 
estate on which he lived ; and, thus tethered to the 
soil, the wretched man had but two alternatives before 
him — to accept whatever terms his lord might offer 
or to starve. The triumph of monopoly was complete, 
for under FeudaHsm, the peasant's economic liberty, 
like his political liberty, was dead. 



96 NEW FALLACIES OF MIDAS 

Times have changed; Httle by little the artificial 
barriers of feudal tenure have been done away ; 
estates have been broken up and land is now more 
widely and evenly aistributed,* more important still, 
new continents have entered into rivalry with the old ; 
new methods of transport have quickened competition 
all the world over ; and the English landowner must 
now acknowledge his defeat by colonists across the 
seas. Monopoly in the old sense is no longer possible ; 
but though the worst menace of landownership is 
gone, its power has been revived in a different fashion. 
The old monopolist became a tyrant, because industrial 
progress was slow ; but the modern monopolist 
becomes a plutocrat because industrial progress 
has been swift. For the sudden development of 
industry which took place during the last hundred 
years, has given to land a new and, as it were, a con- 
centrated value. For it drove two-thirds of the working 
population out of the country into the towns. Now 
manufacture must naturally centre round the sites 
where clay or metal are to be found or where raw 
material can be easily imported ; merchants and 
transport workers must naturally congregate where 
harbours or rivers offer convenient anchorage 
for ships. And, as commerce and manufacture in- 
creased with unprecedented strides, the old towns 
extended their boundaries, new towns sprang up. 
Factories, warehouses, smelting- works, rich men's 
mansions, and poor men's tenements had to be 
built and they must be built on somebody's land. Space 
is needed at whatever cost ; and it must be space here 
upon the spot and not at two miles distance. So the 
man who bought a hundred acres years ago as grazing 

* The beginning of the nineteenth century, however, witnessed a 
new and deplorable tendency towards the formation of large estates : 
the yeoman-farmer was largely dispossessed in favour of the land -lord, 
and it is only lately that the tide has set in the opposite direction, and 
small holdings have begun to be common. 



MONOPOLY 97 

ground for cattle, now finds himself in the favoured 
position of a monopolist. He has no competitors, 
for he can supply what is urgently needed, and nobody 
else can ; and if he makes the most of his chances, he 
may reap an immense and even a fabulous return by the 
exaction of ground rentals ; or (if minerals are found 
upon his land) of royalties. Riches flow in upon him 
through no trouble or virtue of his own (unless it were 
the gift of prophecy). Without himself lifting a finger 
or doing a stroke of honest work, he finds his income 
multiplied a hundred or a thousand fold. And his 
case is common enough ; this is no imaginary or 
exaggerated picture. Many of the wealthiest men in 
the world to-day owe their huge fortunes to some such 
lucky accident or gift of brilliant foresight ; and the 
millions upon millions paid by the tenants and lease- 
holders of our great towns are the " unearned incre- 
ment " of these latter day monopolists. 

We will not waste words here over a justification of 
the Rights of Property. Men have debated long and 
will probably debate still longer, whether land owner- 
ship is an inalienable right or an intolerable abuse, an 
obsolete relic of aristocratic privilege or a natural 
institution which cannot be violated without grave 
prejudice to the common weal. In this case of un- 
earned increment however, we must admit that there 
is excuse, if anywhere, for interference. Govern- 
ments which have dealt with monopoly in other forms, 
may surely deal also with monopoly in land ; it is 
their right at least, if not their duty ; and the Socialist 
would maintain that it is both ; he would deny the 
title of any individual to take so exorbitant a toll of the 
wealth of the community and yet himself do nothing 
to deserve it, — nay, he would go further still and 
condemn all rent as unjustifiable extortion. What 
right, he will say, has one man to benefit by nature's 
gifts which he does not use himself, because another 



98 NEW FALLACIES OF MIDAS 

wishes to use them — to share the profit but not to 
share the toil ? It is as though the village water-man 
were to take possession of the spring, and henceforth 
instead of asking payment for water delivered at our 
doors, were to sit idle by the well mouth and exact a 
fee for every bucket drawn. Value, as we have 
agreed, is proportionate to the difficulty of supply. 
The depth of the well, the weight of the bucket, the 
length of the road, these are natural obstacles which 
can only be overcome by human labour, and which 
therefore may very properly regulate the water's 
price. But to add this further obstacle of the owner's 
tax is both unnatural and unnecessary. In short, 
says the Socialist, abolish rent, take land from private 
persons, hand it over to the State, and then at last will 
value be regulated no longer by the land-owners' 
rapacity, but solely by the services rendered by the 
labour or the skill of men. Unearned incomes would 
disappear ; only the earned remain, and we shall be 
troubled by monopolists no more. Our Socialist's 
reform is sweeping ; he has spread his net cunningly 
and he has drawn it wide ; but if he thinks thereby to 
catch all the big tyrant fishes of the sea, he is certainly 
mistaken for, as shall be seen, he has not drawn it 
nearly wide enough for that. 

Note on Ricardo's Theory of Rent. 

If, upon the Socialist plan, the State were to take 
control of the land and to let it out to tenants at a 
reduced rent or even at no rent at all, it is a natural pre- 
sumption that the prices of produce would be lowered, 
and the consumer would score. But the matter is not 
so simple as that, and if the theory put forward by 
Ricardo is correct, such an idea is pure delusion. Accord- 
ing to his view, the price of corn is determined solely 
by the initial cost of producing it, that is, by the cost 
of seed, implements, manure and, above all, by the 



MONOPOLY 99 

labour of man and beast, but 7iot by rent. It follows, 
therefore, that however much rents may be raised or 
lowered, the price of corn will still remain the same. 

Now, in order to grasp Ricardo's theory, let us first 
observe that lands differ in fertility ; some produce 
corn more freely than others, and on these the cost of 
growing a bushel of corn will be proportionately less. 
Is the price of corn then fixed by the cost of growing it 
on the richest land or on the poorest ? Is it Sir Midas 
Mucklethwaite, owner of the most fertile farm in 
England, who sets the standard of the market ? Oddly 
enough, no ; it is an obscure Irishman who has recently 
broken up a few acres of common land in County Cork 
and farms them rent free at a trifling profit. And the 
reason of this paradox is as follows : that since the 
land is poor, Patrick's corn will cost more to grow, 
and, unless (which in a poor man in unlikely) he is 
prepared to grow it at a loss, his selling price must be 
necessarily high. This is unpleasant for the con- 
sumer, and yet he must pay it, and for a very good 
reason. For with our growing population there is an 
increased demand for corn ; and since somebody needs 
Patrick's corn to satisfy his hunger, somebody must of 
necessity pay the price that Patrick asks. Meanwhile, 
Sir Midas, though he could well afford to sell his own 
corn cheaper, cannot bear to be out-done by Patrick 
(and indeed why should he ?) so he raises his price 
also up to Patrick's level. Thus, the standard of the 
market is not set by him at all, but by his poorest rival. 
The surplus profit which Sir Midas obtains, is the 
reward of owning his more fertile land. 

If we agree with Ricardo so far, let us now enquire 
what is the value of Sir Midas' land ; what is its 
superior quality worth as compared with land like 
Patrick's which can be had for nothing ? or, in plain 
language, what is the rent which Patrick (or for that 
matter anyone else) would have to pay for the use of 



100 NEW FALLACIES OF MIDAS 

it ? Clearly the rent will be the exact equivalent of 
the surplus profit above mentioned — the difference, 
that is, between the production cost of Sir Midas' 
corn on the one hand, and the selling price of Patrick's 
corn on the other. More Sir Midas cannot ask, for 
that would be to reduce the tenant's profit below what 
the tenant could make by farming common land in 
County Cork, and this, as we have seen, would mean 
sheer loss to the tenant. Less Sir Midas can of course 
ask if he chooses ; but that would be to raise the 
tenant's profit above what he could make by farming 
common land in County Cork ; a gratuitous benevo- 
lence on Sir Midas' part, since Patrick, if he got the 
chance, would certainly be ready to make a higher 
bid. Nor would Sir Midas' benevolence affect the price 
which the consumer pays for corn — it would merely 
put a portion of the surplus profit into the tenant's 
pocket from his own, 

Nor will it be otherwise, if the State were to become 
landowner in Sir Midas' place ; it would be powerless 
to reduce the selling price of produce from the land. 
Hence it comes that Henry George, the American, was 
opposed to the Socialist scheme of nationalising the 
land ; and proposed an alternative which many 
thinkers have adopted. Their idea is to tax all land 
upon its rent-value, taking all or most of what the 
landowner receives. If this were done, there would be 
no special advantage in owning rich land, no special 
handicap in owning poor land ; all owners alike would 
start, as it were, at scratch ; their profits would depend 
solely upon their own exertions (as was the case with 
Patrick's farm) and finally the surplus value of all 
lands richer than the meanest common land, would 
pass into the public purse for the benefit of the 
community at large. 

At first sight Ricardo's theory is extraordinarily 
convincing ; and George's is a natural corollary of its 



MONOPOLY loi 

acceptance. Nevertheless most people are unconvinced 
or at any rate unconverted. The Land Tax method 
would probably break down for a reason which we shall 
examine presently. This is the difficulty which would 
inevitably arise in discriminating between the value of 
land pure and simple, and the accessory value, which 
is due to man's exertions. After all, Sir Midas has not 
been idle during all his years of ownership, he has at 
least done something for the soil ; tilled it, manured it, 
hedged it in and planted it with timber. Besides this 
he has built barns and yards and cottages on the estate ; 
developed roads and fitted them with gates. A thriv- 
ing farm possesses much beyond the natural fertility 
of its soil ; and to estimate what proportion of its 
value is due to nature, what to the work of man, 
would be a task which not even the most scrupulous 
assessor could perform with perfect justice. 

But there is a still more vital objection to Ricar do's 
theory, namely, that it does not fit with the facts. He 
wrote, it is true, when the pressing needs of our growing 
popuUtion was forcing men to cultivate poor Irish 
soil : and, if the possibility of expanding agricultural 
production had in truth been limited to these islands, 
no doubt rents would have risen according to Ricar do's 
thesis, and risen to an intolerable extent : but, as 
things turned out, the cultivation of richer lands (rent 
free or almost rent free) in America and elsewhere has 
had the precisely opposite effect. The competition 
of corn imported from abroad has not advanced rents 
in England, but kept them down. It has scarcely paid 
to grow corn in many counties where formerly it was 
a profitable business. In other words, Ricardo' s theory 
is about as applicable to present-day conditions as the 
Law of Moses would be applicable to the city of New 
York. The reforms, therefore, which rest upon Ricardo' s 
hypothesis, are purely chimerical. They simply would 
not help us in the least to solve the problems of to-day. 



Chapter X. 
THE POWER OF CAPITAL. 

(i.) i 

It once befel that in a certain village (not far remote, 
perhaps, from the neighbourhood of Nowhere) there 
arose the very trouble which our Socialist imagined. 
A rapacious fellow — no matter by what means — had 
come into possession of the village spring, and lived 
by levying an extortionate tax upon the water supply 
of the inhabitants. At length the Parish Council 
determined that this tyranny should be endured no 
longer, and agreed amongst themselves to make a 
practical experiment in Socialistic legislation. A 
resolution was unanimously passed, annulling all 
private claims over the natural sources of the supply of 
water ; and thereby the well — for there was but one — 
became Parish property for ever. By a stroke of the | 
pen every parishioner was made free in future to get his 
drink for nothing. Amid general congratulations the 
chairman rose to suggest that a draught of water 
should then and there be fetched and drunk by all 
present in token of their new-won liberties. The 
proposal was enthusiastically received, but scarcely had 
the village beadle been despatched to the well, Vv^hen a 
fresh predicament was disclosed. The well was deep — 
without the use of the rope and windlass which the 
ex-proprietor had installed with his own hands, the 
bucket could not be lowered, much less raised, and the 
sly scoundrel lost no time in informing them that the 
use of these properties was only to be had upon the 
same conditions as before. Now the terms of the 



THE POWER OF CAPITAL 103 

resolution made reference only to the natural sources 
of supply, but did not cover the removal of any man's 
property against his will, nor the confiscation of what 
his personal labour had produced. Argue as they 
might— and argue they did in long and numerous 
debates — no agreement could be reached upon the 
propriety of such a course. In the meantime the owner 
remained m.aster of the situation ; the villagers could 
not live without their water, nor draw their water 
without the windlass and the rope ; there was there- 
fore no alternative but to pay the tax ; and the 
owner's monopoly has continued unimpaired until 
this day. Now the moral of the tale is this ; that the 
means of production and the sources of production 
are often so mutually dependent that a monopoly in 
one may often be as powerful an instrument of extortion 
as a monopoly in the other. The Socialist may confiscate 
the land or deprive the landowner of his rents, but such 
half measures will never bring him to his goal. The 
Capitalist, a yet more formidable adversary, still 
stands astride the path. 

It has never been easy to estimate in their true 
relative proportions what part is played by nature 
and what by man in the process of production, to 
distinguish between the value of the well-head and the 
value of the well, or between the machinery at the pit- 
mouth and the mineral deposits in the soil. Even 
in cases where the means and the sources of production 
are less closely interlinked, no very clear distinction 
can be drawn. But this much at least may be said, 
that, as industry has developed, the importance of the 
means has steadily increased, until in our own day 
Capital has assumed a predominant position in the 
partnership. In olden times, before machinery had 
been invented, the implements of agriculture and 
manufacture were relatively of less importance. Next 
to the material sources of supply it was then man's 



104 NEW FALLACIES OF MIDAS 

labour and man's skill that counted most. Given a 
field ; any smith could make and any labourer drive 
the plough that should till it; given a forest, any 
woodsman could fell the trees, and any joiner turn them 
into houses, furniture or carts ; so the two most power- 
ful elements in mediaeval society were the landowner 
and the Craftsman's Guild. To-day, however, it is 
different ; modern production depends upon an 
elaborate paraphernalia of powerful engines and delicate 
machinery. Without these, not only would most of 
our production be impossible, but the raw material 
would often be nothing better than worthless refuse. 
Were it not for the intricate processes by which valuable 
by-products are extracted from a slag-heap, it would 
simply cumber the ground. Modern science has even 
turned the atmosphere to serviceable uses ; and by a 
recent German invention nitrates are evolved out of the 
empty air. In this case, as in many other instances, 
the whole value seems to centre upon the mechanism 
or production ; and even of industry in general the 
same principle holds true in a greater or less degree. 
The man at the Lancashire power loom is more im- 
portant than the nigger with a hoe ; and the profit 
to be made in turning out the finished article is out 
of all proportion superior to the profit of raising the 
raw material. A very little knowledge of the world 
will show that it pays better to be a manufacturer 
than a farmer. 

In short, the supremacy of the Capitalist in the 
modern world is not to be disputed. His povv^er is 
probably far greater than was ever the power of feudal 
landowners ; his influence extends more widely, 
employing the labour and controlling the destiny of 
multitudes ; his authority strikes no less deep into 
the social and political life of countries, bending even 
emperors or governments to his will. Yet, for all 
this, it can hardly be asserted that his power is based 



THE POWER OF CAPITAL 105 

upon monopoly. Capital is not of its own nature an 
obstacle to competition. For, in the first place, it is 
not like land limited in dimension. No amount of 
thought or trouble can add new acres to the earth's 
natural surface ; but you may build factories, and 
laboratories, railroads or smelting works, so long as 
there is room to build or a need to satisfy. Any man 
who has saved himself or can borrow other's savings, 
can make a fresh addition to the world's capital ; and 
though here and there some novel invention or other 
unique advantage may put a temporary monopoly 
in the hands of some fortunate capitalist, yet where 
he can lead, somebody else can follow ; the rights of 
patents are not so rigid or exclusive but that others 
can profit by a new idea, and in the long run com- 
petitors will not be wanting. In the second place, 
capital is far more widely distributed than land. Any 
man who has saved even a few pounds to invest in 
railways, oilwells, motor works or what not, can have 
his share in capital. In virtue of that share he can 
claim that somewhere there exists a yard of railway 
track which belongs to him ; or an engine crank that 
his savings have helped to create ; and there would be a 
sort of truth in his jesting boast. To the length of his 
few pounds he, too, is a capitalist. But, although 
capital is more easily acquired and possesses greater 
elasticity than land, it is in these very qualities that 
lies the secret of its peculiar power. Capital may be 
not productive merely ; but self-productive. It 
resembles that tropical tree whose roots send forth fresh 
suckers from which new trees spring up. In like 
manner the capitalist can utilise his profits for the 
erection of new factories, the employment of more 
hands, or the improvement of his plant ; and thus 
in a hundred ways secure fresh capital and fresh 
profits— to be used in turn for the same purpose as 
before. In this fashion, large businesses have sprung 



io6 NEW FALLACIES OF MIDAS 

from small beginnings, and men who have started life 
with the proverbial sixpence in their pockets, have 
become the kings of industry and commerce. 
Millionaires and even multi-millionaires are now 
no rare phenomenon, and wealth accumulates and 
grows in the hands of such individuals until imagin- 
ation can no longer grasp the magnitude of their 
resources ; and all the while fresh profits are rolling 
in upon them (far more than any man could spend 
upon himself) and are in their turn sent back to swell 
the central stream. Unto him that hath shall be 
given, is the inevitable law of high finance. 

But the Bible text does not end there ; and un- 
happily its conclusion has also its economic counterpart. 
The great industrial change which brought so rich 
an opportunity of profit for those who possessed a 
share in capital, was the beginning of a very disastrous 
era for those who possessed none. It was after all an 
insignificant fraction of the whole people that shared 
those opportunities. The millions of workers whose 
wages were seldom sufficient and never more than 
sufficient to keep them clothed and housed and fed, 
were not able to save. If from week to week a' few 
pennies were put by, the hoard was kept against the 
accidents of sickness or the coming of old age ; they 
had not the power, or if the power, then not the habit 
to invest. Beyond a few sticks of furniture, a little 
crockery, perhaps a tool or two, the poor possessed no 
property of their own ; and in the vast apparatus of 
mechanical production, the powerful instrument of 
loom and forge, printing press and lathe, they had no 
share at all. Their only capital (if we may call it so) 
was strength of muscle and skill of hand ; and with 
these feeble resources they were compelled to pit 
themselves in an unequal conflict against the Capitalist 
Colossus. For conflict it certainly was ; and unequal 
(under such conditions) it must be, as surely as the 



THE POWER OF CAPITAL 107 

bargain between a man with a loaf and a starving 
beggar must be unequal. For, though a bargain is a 
voluntary exchange between two parties, it does not 
necessarily follow, that the bargain will be fair or that 
the two parties will compete upon an equal footing. 
It may well be that one will hold the other at a dis- 
advantage ; his bargaining power, as we say, will be 
the stronger of the two, and, like the commander of the 
victorious army, he can dictate the terms. Yet, to say 
this is nothing more than to restate in different words 
the old formula of supply and demand ; and it is by 
the light of that formula perhaps that we can best 
understand the relations of capital and labour and 
estimate the bargaining power of each. 

First then as concerns demand. It is clear that 
each wants what the other has to give ; Capital wants 
work, and Labour wages; but their wants, though 
mutual, are very different in degree. The employer, 
it is true, depends for his success upon the services of 
labour ; he may be ruined in his business, if labour 
fails him ; but, even in that case, all his eggs are 
seldom in one basket ; he will have some reserve of 
funds ; most certainly he need not starve, perhaps 
not even put down his horses or dismiss his butler. 
For the worker it is far otherwise. His weekly earnings 
are sufficient only for the week ; he has no reserve or 
next to none ; and if a few shillings lie between him 
and starvation, that is all. For him., Hving thus upon 
the edge of absolute disaster, the first necessity is to 
find employment. Upon what terms he can hardly 
stop to ask. If is not for him to haggle ; for upon a 
trial of strength he must inevitably prove the weaker 
man ; and before the employer has seriously con- 
sidered some readjustment of the household, he and his 
family will have starved. The balance in the bargain 
is against him. 

Nor, if we turn to the question of supply, is the 



io8 NEW FALLACIES OF MIDAS 

worker's case much better. He needs a job ; but that 
there are seldom jobs for all, requires no proof. Un- 
employment is only too common and too obvious a 
circumstance. Trade fluctuates ; a slump follows on 
a boom and mills and factories are shut down or the 
number of hands reduced. Many industries offer no 
more than temporary employment, and in the off 
seasons many an able-bodied man will be thrown out of 
work and tramp the streets in search of some casual 
employment. And the natural corollary of all this it 
is not difficult to see. The employer for his part finds 
no difficulty of supply. With this floating reserve of 
unemployed and casual labourers to draw on he can 
get all the labour he requires. The more numerous 
the applicants and the keener the competition for the 
post, the closer will be the bargain he can drive and the 
lower the wages he need pay. Only at rare intervals 
does an actual scarcity of labour turn the balance 
decisively against him. Such was the scarcity that 
followed the Black Death, and first broke down the 
tyranny of feudal customs ; the plague by killing off 
large numbers of the peasants, enhanced the value of 
the survivors' labour and gave them the opportunity 
to turn upon their masters. Such again has been the 
scarcity which in our own time was caused by drafting 
of the able-bodied into armies and which raised the 
scale of wages to an unprecedented level. But these are 
exceptions to the general rule ; normally the supply of 
labour is in excess of the employer's demand, and 
never more so than in the first half of the last century, 
when the impetus of the Industrial Revolution was first 
gathering strength, and when the relations of capital 
and labour, as we know them, first took shape. 

(II.) 

Since the early days of capitalist supremacy much 
has happened to alter the course of the ecorlomic 



THE POWER OF CAPITAL 109 

struggle. The social conscience of the nation has 
awakened ; Labour has begun to organise and Govern- 
ment to interfere ; and the picture which we have 
drawn of the capitalist's power and the labourer's 
necessity, though true of many, is by no means true of 
all classes of industry to-day. But as a picture of the 
early stages of the industrial revolution it is certainly 
not overdrawn. Indeed the shadows are hardly to be 
painted dark enough ; it is almost impossible to 
exaggerate the misery and horror of those years. It 
is one of the most bitter ironies of fate that the very 
change which by increasing the facilities for plentiful 
and cheap production ought to have brought an imme- 
diate improvement in the condition of the poor, had 
at first an almost directly opposite effect.* For one 
thing the new mechanical appliances which very soon 
ousted the old-fashioned methods of hand labour, 
required fewer men to work them. A reaping machine 
will take the place of a dozen mowers ; and one or 
two tenders of a power loom could do the work of 
perhaps fifty weavers ; thus many handicraftsmen 
found themselves thrown out of employment ; and we 
cannot wonder that they bitterly resented the intro- 
duction of these new machines which robbed them of 
their livelihood, or that their protests often took the 
most violent and most lawless form. Then again, it 
was soon discovered by employers that in the new 
processes of industry there was ample scope for using 
female and child labour. Women were set to work in 
factories by night as well as day ; children, ten, eight 
and six years old, were employed in coal mines dragging 
preposterous weights through the damp, unwhole- 
some galleries. Manufacturers even procured girls 

* It must not be assumed, however, as it too often is, that the lot 
of the labourer before the Industrial Revolution was a bed of roses. 
Poverty and distress were perhaps just as common, but the conditions 
of the towns seems to accentuate the hardships of the poor — partly by 
contrast with the more obvious luxury of the rich. 



no NEW FALLACIES OF MIDAS 

and boys from workhouses and foundling hospitals ; 
and subjected them to a lifelong drudgery little better 
than the bondage of a slave. Meanwhile thousands had 
left their country homes and migrated to the new 
•industrial centres, urged thither by the loss of their old 
livelihood or enticed by the hope of a better. So the 
population of the towns steadily increased ; and the 
families, herded together in conditions of appalling 
squalor, grew and multiplied prodigiously ; for the 
poorest and most miserable classes, among whom 
parents are over-eager to reap the advantage of their 
children's labour, are naturally the most prolific. 
With food at high and (until the repeal of the Corn 
Law) at intolerable price, wages were quite inadequate 
for decent comfort or nutrition. For the weaker and 
less skilful life became a veritable struggle to survive. 
From all the various causes which we have just 
described, the supply of labour now far exceeded the 
natural demand, and the result was the most bitter 
competition for employment. Moreover, the oppor- 
tunities of finding it were strictly limited. If it was 
not to be found upon the spot, there was little chance 
of gaining information about other towns, and, if 
information were forthcoming there were few facilities 
for travelling thither. Railways were neither cheap 
nor numerous ; and labour bureaux were not invented. 
So in the matter of labour employers had no special 
fear of distant rivals ; they exercised a local monopoly, 
and provided that the wage they offered was enough for 
bare subsistence, they were sure to find applicants in 
plenty. Nor did they scruple to take advantage of 
their power ; and as their wealth multiplied, their 
position became more and more secure. They could 
face the feeble opposition of the masses — Chartists 
strikers and even rioters — with the confident assurance 
of the stronger party. To the ominous signs of a still 
deeper and more lasting discontent they hardly gave 



THE POWER OF CAPITAL iii 

a thought — until little by little there came over England 
that fatal cleavage of the classes which was the begin- 
ning of industrial war. 

This absence of sympathy between Capital and 
Labour was in part at least the inevitable consequence 
of the industrial innovations. In the old-fashioned 
craft workshop master and apprentices, employer and 
employed, had lived and worked together side by side ; 
and such daily intercourse had bred between them a 
mutual loyalty and goodwill. But the head of a 
factory employing perhaps a thousand hands could 
hardly keep in touch with individuals. The bond of 
sympathy was broken ; and, just when it was most 
needed, the employer ceased to feel a sense of personal 
responsibility towards the men and women he employed. 
As was natural, the softer feelings of generosity and 
pity were slowly blunted, and even the most respectable 
and virtuous employers were indifferent to the sufferings 
which often unwittingly they were inflicting on their 
fellow-beings. But as though half conscious that some 
justification was required for such rigorous and even 
inhumane conduct of their business, they sought to 
reinforce their shaken assurance of moral rectitude by 
an appeal to economic wisdom. They were them- 
selves the disciples and in some sense the product of 
that school of thought which began with Adam Smith 
and was carried on by John Stuart Mill. From these 
teachers they had imbibed the doctrine which was the 
basis of their business creed, that it was the economic 
duty of every individual to put his own interest first and 
others' interests nowhere, driving the closest bargain 
possible, buying in the cheapest market, selling in the 
dearest, and applying the principles of supply and 
demand without scruple or restraint. Unfettered 
and even ruthless competition was to them the very 
soul of commerce, and to do them justice they were 
sufficiently consistent to maintain their creed even 



112 NEW FALLACIES OF MIDAS 

when it might tell against them. They would uphold 
the principle of Free Trade and the Open Door, 
although the importation of cheap foreign goods might 
prejudice their own sales in English markets ; and they 
met competitors at home with the same bold spirit of 
defiance. They asked no quarter and gave none ; 
so it seemed only fair and natural that in their attitude 
towards labour they should pursue their settled 
policy. Between labourer and capitalist, it was each 
for himself, a fight to the finish in a fair field and no 
favour ; and if the labourer should make but a poor 
fight of it, so much the worse for him. And, when 
doubts arose, as they were bound to do, concerning 
the justice and morality of such a course, the sponsors 
of this gospel of selfish individualism were prepared 
with their defence. The defence which they advanced 
was as paradoxical as it was ingenious ; for it claimed 
that the very keenness of the struggle was in reality 
for the worker's own advantage. The interest of the 
whole community, it was said, would best be served 
when every individual pursued his own interest to the 
uttermost of his power. The prosperity of all could 
only proceed from the prosperity of each ; let each 
therefore strive to develop as best he could the means 
and resources which lay at his disposal, and it would 
inevitably follow that production would be multiplied, 
the volume of trade increase, and the richest possible 
harvest would eventually be reaped by the community 
at large. In such a consummation even the poorest 
workman would have an ample share ; everything 
would be plentiful, every price cheap and everybody 
prosperous. 

To this philosophy no reasoned opposition was 
offered and hardly a voice (for a while at least) was 
raised against it. Its supporters, who, because they 
were chiefly to be found in the big industrial and 
commercial centres of the north, came to be known as 



THE POWER OF CAPITAL 113 

the Manchester School, saw no reason to go back upon 
their logic. Wrapt in the security of their comfortable 
creed, they continued to pile fortune upon fortune ; 
for the miserable condition of the masses upon whose 
labour and poverty these fortunes were in a large 
measure built, they felt no doubt an honest regret and 
pity. In private perhaps they would indulge this 
secret weakness, doing a kind turn to an employee 
in distress and permitting their wives to make charit- 
able doles of soup or blankets. But in the counting- 
house or at the works they suppressed these softer 
feelings, conscientiously tenacious of their creed. 
And if its present application bore hardly upon others, 
what could they do but shrug their shoulders and 
pursue their course to its appointed end ? Let their 
philosophy but be given a fair trial, and all would 
yet work out for the best. 

When the fathers have eaten sour grapes the 
children's teeth are set on edge, and there is much for 
which the Victorians must be answerable in the in- 
dustrial troubles of to-day. Yet easy and natural as 
it is for us to condemn the sins for which we suffer, we 
should be doing less than justice to the Victorians if we 
did not acknowledge the one great debt we owe them. 
Coming at a time when the paramount necessity was 
to increase production, it is undeniable that they 
performed their task. They built up the capital 
resources of which we are reaping the benefit to-day, 
and their only crime was that they so exaggerated 
the importance of this economic function as to be 
blind to other issues which were important too. In 
short, as is the common failing with authors of great 
changes, the leaders of the Industrial Revolution 
overdid their part. The idea which underlay their 
policy was sound enough, but like most ideas, it 
became intolerable when pressed to its logical con- 
clusion. As a reaction from the hampering restrictions 



114 NEW FALLACIES OF MIDAS 

of the previous economic era, their programme of 
Free Trade and Open Competition was an undeniable 
advance; and it is to their lasting credit that they 
founded a school of thought which was then, as it is 
now, the mainspring of progressive Liberalism. In so 
far as their policy inflicted grievous harm on others, 
they were perhaps as much the victims of circumstance 
as the conscious or willing authors of distress. The 
individual, let us remember, is nearly always the 
creature of his environment ; he cannot easily resist 
the overwhelming pressure of events, or rebel against 
the standard of the society in which he lives. So, 
before we pass judgment upon the Victorian manu- 
facturer, we should in very justice take account of 
the difliculties in which he stood. He was himself 
faced with the keenest competition of energetic rivals ; 
and if the wages that he paid were low (though in 
point of fact they were not so low as the wage of the 
agricultural labourer) it was the market and not he 
that fixed the standard. The very urgency of men's 
needs was with him an argument for offering a low 
wage ; for it seemed inevitable, and in a certain sense it 
was inevitable, that the most urgent need should be 
satisfied before the need which was less urgent ; and 
the only way to discover where the pinch was most 
severely felt, was to ofier employment to the lowest 
bidder. Such reasoning did not appear to the Vic- 
torians as contrary to justice or humanity ; and even 
if it had appeared so, they could hardly have helped 
themselves. For us, looking back from a more secure 
and prosperous era upon the bitter struggle of those 
times, it is easy to correct the fallacies into which they 
fell. For now the pendulum has swung once more ; a 
new reaction has set in ; and where they rightly saw 
the necessity for individual freedom, we now see the 
danger of too much freedom and the necessity of 
curtailing it. And so for us unlimited competition is 



THE POWER OF CAPITAL 115 

suspect. Individualism stands at a discount, and 
Socialism and Co-operation are the favourite catch- 
words of the day. Each generation is to be judged 
according to its lights ; and if the worst fault of the 
Victorians was that they carried their principles too 
far, it is for us to profit by their example ; and while 
we endeavour to correct the results of their exaggerated 
creed, let us beware lest we fall under the same con- 
demnation and mar even beneficent reforms by a lack 
of patience or an excess of zeal. 



Chapter XI. 
THE PROTEST OF RUSKIN. 

(i.) 
In the ferment of revolutions (whether of trade or of 
politics) half a truth is a better guide than no truth at 
all ; and the Manchester doctrine, crude and per- 
verted as it was in some directions, contained enough 
economic wisdom to produce good results as well as 
evil. The crowning triumph of its political supporters 
who succeeded through the repeal of the Corn Law in 
1846 in wresting an unfair privilege from a landed 
aristocracy and in opening the door to the free im- 
portation of cheap grains from foreign countries, did 
more to alleviate popular distress than any amount of 
sentiment or charity could have done. The effect of 
this reform was almost instantaneous ; and during 
the third quarter of the century there was a steady 
improvement in the condition of the working classes, 
who were now able to secure at least the necessities of 
life at moderate prices. At the same time the benefits 
of increased production were beginning to make them- 
selves felt. The enterprise of the capitalists who had 
succeeded during the forties in laying down railroads 
over thousands of miles of country and in every part of 
England, gave a fresh impetus to trade and led to a 
period of unprecedented prosperity in which every 
class could claim some share. During these years it is 
not much to say that a third of the population were 
raised above the limit of abject poverty. The tide 
was turning at last; and one index (though an un- 

116 



THE PROTEST OF RUSKIN 117 

wholesome index) of the change is to be found in the 
portentous growth of the national expenditure on 
drink, a growth which continued unabated until the 
lean years of trade depression in the seventies. In 
industry too the worst abuses were gradually suppressed. 
The philanthropic zeal of Lord Shaftesbury and others 
set the political wheels in motion, and laws were passed 
curtailing the use of child and female labour in pits and 
factories. Yet to whatever causes we may ascribe 
the betterment of the working man's position, the 
capitalist himself deserved no special thanks. Though 
he might fairly interpret the new prosperity as a 
justification of his own theories, yet there was no 
recantation of his main hypothesis, and little enough 
change of heart. The grinding tyranny of merciless 
competition still held the field unchallenged ; even 
earnest men like Bright and Cobden who had achieved 
the deliverance of the country from the killing burden 
of the Corn Tax, were nevertheless among the most 
stubborn opponents of Lord Shaftesbury's reforms. 
In a large number of industries wages were still main- 
tained at a starvation level. The tale is told how in the 
streets of Leicester, the Chartist, Thomas Cooper, hearing 
the stocking-makers busy at their work far into the 
night, and enquiring of a friend what wage they earned, 
was told that the wage was about four and sixpence.* 
'* You mean four and six a day," said Cooper, in all 
innocence. *' No, four and six a week," was the reply, 
and this for working sixteen hours out of the twenty- 
four. Such a state of things was not to be remedied 
in a day, and meanwhile it was regarded, by theorists 
and society alike, as the outcome of an economic law 
which with the best will in the world neither capitalist 
nor labourer was able to alter or resist. So accepting 
poverty and distress as the inevitable accompaniment 

* See an essay in Arnold Toynbee's " Industrial Revolution " 
entitled " Industry and Democracy." 



ii8 NEW FALLACIES OF MIDAS 

of industrial progress, Mid- Victorian England refused 
to vex its soul over such matters ; and relapsed into 
a self-satisfied complacency which contrasts strangely 
with the qualms and heart-searchings of our twentieth 
century days. 

Into this secure world of comfortable platitudes 
and prosperous energy, there was launched at length a 
challenge which startled and not a little shocked it. 
In 1869 John Ruskin, known hitherto as a brilliant 
but somewhat wayward critic of painting and Italian 
architecture, wrote for the Cornhill Magazine a series 
of four essays, which eighteen months later were 
published in a book entitled, " Unto This Last." In 
these essays Ruskin denounced in no veiled terms the 
utter rottenness of the industrial conditions then 
'prevailing. His was not perhaps the first protest that 
was made ; Carlyle had inveighed against an avaricious 
age with all the passion of his racy rhetoric. Dickens 
in " Hard Times," and other novels, had revealed 
something of the miseries of the poor. But to challenge 
the authenticity of the Manchester gospel, to call in 
question the truth of its fundamental hypothesis, this 
had hardly been attempted till Ruskin dared it in this 
wonderful book ; wonderful alike in the audacity of 
its enthusiasm, which defied all the most cherished 
convictions of his day, and in its prophetic vision which 
outran time and with the insight of true genius seems 
to have foreshadowed future changes and heralded in 
advance the deep movings of a national conscience, 
tardily, but in our own days at least, unmistakably 
awakening ; a wonderful book, too, it must be owned, 
in its reckless disregard of self-consistency and its 
defiance of the hard logic of fact. There is no mis- 
taking Ruskin' s message, however ; it was delivered 
with a lucidity born of passionate conviction ; with an 
eloquence enriched by a wealth of metaphoric imagery 
and biblical quotation, and with all the musical art of 



THE PROTEST OF RUSKIN 119 

that poetic prose of which he was so supreme a master, 
and the very beauty of which (as Ruskin himself 
complained) often diverted men's attention from the 
meaning of his message. As a treatise, it is true, it 
possessed neither reasoned form nor scientific com- 
pleteness ; but to his own generation at least its 
contents were so wholly new and so subversive of 
accepted canons, that it is well worth our while here to 
recapitulate his principal contentions. 

The contemporary science of Political Economy 
was built, as it seemed to Ruskin' s generous mind, 
upon a fundamental falsehood. Like a science of 
gymnastics which should assume that men had no 
skeletons, it undertook to examine the dealings of 
man with man, and it left out his soul. At least, it 
allowed for one side of it only, and that the worst 
side. Thanks to this initial error, says Ruskin, the 
man of business had come to believe that it was his 
first duty to eliminate all the kindlier instincts and 
emotions and that the first condition of success was to 
be selfish. Society at large had not unnaturally 
taken the man of business at his word and imagining 
him at best to be a pure self-seeker, had come to rate 
the commercial profession lower in its esteem than the 
professions of the soldier, the clergyman, the doctor 
and the lawyer. Ruskin pleaded for a revision of this 
judgment ; he maintained that commerce was not 
incompatible with Christian morality. The employer's 
part was not of necessity to grind the faces of the poor 
and depress wages to the lowest farthing. For him, 
too, no less than to other men, there was a call to 
nobler duties and loftier ideals than the interest of 
self. In commerce, too, '* it is necessary to admit 
the idea of occasional voluntary loss ; that sixpences 
have to be lost as well as lives, under a sense of duty ; 
that the market may have its martyrdoms as well as 
the pulpit ; and trade its heroisms as well as war." 



120 NEW FALLACIES OF MIDAS 

It was the precedent set by the " more honourable " 
professions of the soldier, the doctor and the priest, 
that furnished Ruskin with his main constructive 
idea. Taking these for his model, he elaborated a new 
principle upon which wages should be determined. 
It is not, he argues, the way of the world to bargain 
or haggle over a subaltern's pay ; " sick, we do not 
inquire for a physician who takes less than half a 
guinea ; litigious, we never think of reducing six and 
eight-pence to four and sixpence ; caught in a shower, 
we do not canvass the cabmen to find one who values, 
his driving at less than sixpence a mile." Like every 
one of these, the labourer in factory or coal pit is also 
worthy of his turn ; his labour has an absolute value ; 
and its price should be a settled and recognised price. 
That price should not be affected either one way or the 
other by the influence of supply and demand. What 
have they to do with the value of a man's honest 
labour ? ''I want a horseshoe for my horse ; twenty 
smiths or twenty thousand smiths may be ready to 
forge it ; their number does not in one atom's weight 
affect the question of the equitable payment of the 
one who does forge it." A service done, we should 
reward it, whether it be done well or ill, by the same 
fixed and level wage. For " a man's labour for a day 
is a better standard of value than a measure of any 
produce." 

Ruskin did not imagine, however, that competition 
could be altogether banished ; it will remain, but 
under a different and healthier form. By our present 
practice, *' according to the laws of demand and supply, 
when two men are ready to do the work and only one 
man wants to have it done, the two men underbid each 
other for it ; and the one who gets it is underpaid. 
But when two men want the work done and there is only 
one man ready to do it, the two men who want it done 
overbid each other and the workman is overpaid. 



THE PROTEST OF RUSKIN 121 

But this, by Ruskin's method, could never happen ; 
for the wage would no longer vary. Instead of this 
selfish and suicidal competition by which one man is 
forced to bid against his fellow we shall have an 
honourable and salutary emulation. For the man 
who does the Work well, will find employment, the 
man who does it ill, wall not. The reward of the good 
workman will no longer be the uncertain chance of 
driving a closer bargain than his fellow, but the com- 
fortable assurance of a settled livelihood. The bad 
Workman for his part will sink to a lower grade of 
employment. He will not work for the original 
employer, but may be, for his more successful rival ; 
for the latter (earning now a just and ample wage), 
will have the wherewithal to satisfy new wants and 
will be able to pay the inferior workman to provide 
for their satisfaction. So it comes about that the good 
money paid by the employer to the first workman 
passes on from him to benefit the second also ; and 
instead of two men* serving one employer at an unjust 
price, we shall now have one man serving the employer 
and another man serving the employed — and each 
at a price which is just. 

Many other things Ruskin has to say in " Unto This 
Last," some which concern Political Economy and 
others which do not ; neither need occupy us here. 
His essays, as he himself says in the Preface, " were 
reprobated in the most violent manner by most of the 
readers they met with." The prophet had no honour 
in his own generation. Nevertheless his teaching 
sowed good seed. Its moral appeal went far deeper 
than its logic. And when all its exaggerations, its 
contradictions and its fantasticalities are discounted, 
there remains much in what he said, which has left an 

* Two men serving the employer because (as Rnslcin argues) bj^ his 
under-payment of workman Number One, the employer will have saved 
enough to employ workman Number Two as well. 



122 NEW FALLACIES OF MIDAS 

enduring mark on the ideals and policies of the years 
which have followed, 

(ii.) 

The heresy of yesterday is not seldom the orthodoxy 
of to-day ; and, since Ruskin delivered his message to 
deaf and stubborn ears, the world has travelled far 
along the path he showed it. Ideals and standards 
have changed ; the old indifference has vanished ; 
and in theory at least, if not in practice, we have all 
some sympathy to spare for the grievance of the 
" sweated" labourer, some pity for the slum-dweller, 
and the unemployed, and the *' submerged tenth." 
Consistent perhaps we cannot always boast to be. 
To purchase shirts or candles at the cheapest possible 
price is thought fair game enough ; but to deal with 
other men's labour in the same fashion seems some- 
how different, and, though we are too prone to forget 
how often cheap goods mean ill-paid labour, yet in 
drawing this very distinction we give proof how far our 
point of view has changed. For us human toil (and 
the welfare of lives and families dependent on it) is not 
a commodity like other commodities to be bandied to 
and fro by the callous hucksters of a market. The 
labourer, it is now remembered, is also a man, and not 
an inanimate piece upon the economic chess-board. 
Thus far at least Ruskin has won us to his way of 
thinking, yet seeing how widely different is the England 
of to-day from the ideal England which Ruskin had in 
view, we cannot but ask ourselves whether or no his 
schemes of reform, and in particular his scheme of the 
level wage would be practicable or beneficial. 

Now, if what Ruskin advocated was simply a 
standardisation of wages, it may be said at once that 
things have moved already some way in that direction. 
Through the efforts of Trade Unions up and down the 
country, some sort of agreement has been reached 



THE PROTEST OF RUSKIN 123 

with masters ; and a particular price has been assigned 
to a particular piece of work. The turning of a lathe, 
the minding of a loom, the sorting out of coal lumps, 
and even the laying of a brick have each their settled 
price. But even in these organised trades it must be 
admitted that there is still a wide divergence between 
district and district, and it may be between neighbour- 
ing workshops. There are many occupations, how- 
ever, in which wages are not so regulated ; thus before 
the Agricultural Legislation of 1917, the weekly 
earnings of a farm labourer in different parts of the 
country varied as widely as from twenty-two shillings 
to twelve ; and it is the same with hundreds of lesser 
jobs. In short, it is one of the chief duties of Labour 
in the future to force such organised arrangements 
upon employers, and defeat the inevitable tendency 
of struggling workmen to undersell each other. 

If, however, Ruskin imagined that by the system 
of the level wage he would eliminate the inexorable 
influence of demand and supply, he was very much 
mistaken. For without reference to these it is im- 
possible to set a value upon labour at all. Time, as 
he himself admits, is no true standard. If a coal- 
heaver works twelve hours to provide a Prime Minister 
with coal, he cannot expect twelve hours of service in 
return. A general's time is more precious than a 
private's ; and ten minutes of a skilled physician's 
thought is worth an apothecary' s fortnight. So Ruskin 
falls back in due course upon the notion that skill must 
be the basis of evaluation. Yet has skill a value on its 
own account, or is it not of value just in so far as it 
satisfies the needs of men ? A person may possess 
great skill in the study of Hebrew dialects or in the 
making of periwigs ; but if nobody shares his anti- 
quarian zeal, or wishes to wear false hair, he could not 
make a penny by either. In Ruskin's time there still 
existed men and women who were experienced in the 



124 NEW FALLACIES OF MIDAS 

use of the hand-loom ; their skill was undeniable, but 
if it had been urged that they should continue to receive 
their former takings, it would have been a puzzle where 
to find the money. Skill even of the highest sort must 
often go unrewarded, and the greatest epic in the 
English language brought Milton five pounds for the 
first edition. Ruskin no doubt would have been ready 
to devise a scheme for the detection and reward of 
unrecognised genius. But it would have taxed 
Rhadamanthus himself to decide between all the rival 
claims. The fact is that it is impossible to assess the 
worth of all the various services of men, without reference 
to the existing scales of values ; and that scale of 
values is at bottom based upon supply and demand. 
The claim of the skilful to receive more than the 
unskilful lies in their rarity and nothing else. If 
schoolmasters receive better pay for teaching Greek 
than for teaching the alphabet, it is because few men 
have the opportunity of taking a classical degree, and 
of these fewer still have the taste or the capacity for 
teaching. If by some miracle all the babies born since 
1850 had been natural Greek scholars and instinctive 
pedagogues, it is more than probable that scholastic 
salaries would be lower than they are. But (to take 
a less fantastic supposition) let us suppose that a mine 
is opened in South Africa which works for three years 
without disaster. At the end of the third year, half 
the pit hands develop unmistakable symptoms of 
consumption ; and doctors impute the outbreak to the 
condition of the mine. If there were no falling off next 
year in the number of applicants for work, the directors 
might be secretly surprised and gratified, but they 
would certainly not raise the wages. If, however, 
nobody applied, they would raise the wages (within 
the compass of what the mine could itself afford) until 
somebody did ; and the wage would settle at the precise 
amount which would tempt workmen in sufficient 



THE PROTEST OF RUSKIN 125 

numbers. Here, then, is a nice question for dis- 
cussion, what value men will set upon the loss of a 
lung, a question to which no Board of Assessors that 
ever sat could offer an adequate solution ; but a 
question which is solved easily enough by the practical 
arithmetic of supply and demand. 

Thus any attempt to fix the value of work by any 
arbitrary standard will be fraught with real and almost 
insurmountable difficulties. Even if the standard 
were satisfactorily settled now it would be out of date 
in a few years time. There will be changes in men's 
habits and ambitions, changes in their taste for one 
sort of work and distaste for another, changes in the 
productiveness of their labour and in the cost of living. 
None of these factors but will have an influence upon 
the question of their remuneration. Some of these 
factors no trained assessor could foresee or compute ; 
others have, in the past and present, proved a 
stumbling block to practical reformers. If, for 
example, women are to be absorbed into a new branch 
of industry, it is no easy problem to decide whether 
they shall enjoy the same rates of pay as men, or 
whether the men's labour will depreciate in value. 
Again, the cost of living varies in different parts of 
England, and although the wages of both are fixed at 
the same rate, an artisan in one district will be better 
off than his fellow in another. In each of these two 
cases the influence of Supply and Demand will creep 
in and upset the justice of our calculations. To 
evade them altogether seems difficult if not impossible, 
but the most striking illustration of the difficulty is 
to be found in the problem of the minimum wage — a 
reform which approximates perhaps most nearly to 
Ruskin's own suggestion. Let us suppose, that 
a minimum wage is promised to the men of the 
Welsh coal fields ; in consequence of the increased 
drain on their resources many owners find that the 



126 NEW FALLACIES OF MIDAS 

profits of their mine are reduced to nothing, so the 
mines are closed. Or, again, suppose a manufacturer 
of toys agrees to pay his Workmen a wage of thirty 
shillings, in order to make a clear profit, he is then 
forced to raise the price of his toys, and soon he will 
find that he is undersold by cheap toys coming from 
abroad, where toy makers subsist upon a pound. So, 
unless a State Bounty or a Protective Tariff comes in to 
save him, his trade is ruined. Perhaps it may be as 
well to put an end to mines or industries which are 
either so unproductive or so badly managed that the 
employer cannot afford to pay their workers a living 
wage and at the same time hold their own in compe- 
tition ; but it may equally be argued that, when the 
workers of a nation claim for themselves a high 
standard of living and yet fail by the quality of their 
work to justify that claim, the nation must go under. 
Their goods will become too dear to find a market ; 
their trade will vanish and with it the very means, I 
will not say to live at the high standard they have set, 
but even to live at all. In short, their defiance of 
supply and demand will be to court disaster, for the 
old mole working below the surface will be the undoing 
of them yet. 

Yet in speaking of the minimum wage, there is 
another possibility of which we must take account, 
and which may even reveal it in a better light as a 
practical and salutary reform. Ruskin struck upon 
a truth which went even deeper than perhaps he 
knew, when he described the benefits of paying a 
" just " wage. It is better, he said, that one workman 
should receive an ample wage and therewith engage 
the services of another than that both of them should 
work for one employer at an insufficient wage. There 
is no doubt that it is better, and often the raising of 
wages to a higher level may be a stimulus to industry 
and not a drag — and this in two ways. First, then, it 



THE PROTEST OF RUSKIN 127 

is obvious that the wage-earners' power of purchase 
will be thereby increased. He will have more to 
spend ; he will discover new wants to satisfy, and 
other workmen will be called upon to produce for the 
satisfaction of those wants. Now, as we have seen 
above, the great need of the world is to produce more 
plentifully and more cheaply. If man chooses, he can, 
by the exercise of his wits no less than by the exertion 
of his body, devise more rapid and more fruitful 
methods of production than he has in the past employed. 
But he needs some stimulus to do so ; and the best 
stimulus of all is a declared and obvious demand. 
Men will not produce unless they are certain that 
others will consume ; therefore the best means to 
quicken the producer's energy is to increase the con- 
sumer's power of purchase. So the universal minimum 
wage, though in the long run it must be expected to 
cause a general rise in prices, may in the meanwhile 
have done its work by improving man s industrial 
methods, drawing out his inventive faculty and 
infusing, as it were, fresh blood into the languishing 
body of commerce. But besides the stimulus which 
the minimum wage may give to industry as a whole, it 
may prove a more particular advantage to the trade 
which it immediately concerns. Nothing is more 
strange than the persistent blindness of employers to 
the very obvious fact that ill-paid labour does not pay. 
A worker who is badly kept and poorly fed cannot in 
reason be expected to perform the best work of which 
he is capable. The most crying scandal of the nine- 
teenth century is the ill-health of our urban populations 
and the deterioration of the national physique. Girls 
and boys who are brought up on insufficient nourish- 
ment, represent so much loss of economic power to the 
community. Men and women who are compelled to 
labour under distressing or insanitary conditions are 
wasting that vital energy which is the nation's most 



128 NEW FALLACIES OF MIDAS 

precious capital. It has now been abundantly proved 
in our Colonies, in America, and at last perhaps still 
nearer home, that the best investment which an 
employer can make, is the money spent upon the health 
and happiness of his employees. Whatever he can do 
to ease the tedium of the work, to make surroundings 
healthy and cheerful, and even to provide relaxation for 
mind and body, will repay him handsomely in the 
increased output of his industry. He will have at his 
command both more efficient and more willing 
workers ; and the goodwill of his men is the most 
valued asset of the wise employer. How much more 
it is essential to pay not a " living wage " indeed, but 
such a wage as will offer the highest possible return in 
increased efficiency, is a lesson which has been learnt 
too slowly, but which now perhaps is beginning to be 
learnt at last. 

If, however, we are to conclude that this is all that 
Ruskin meant, we have strangely mistaken the 
purpose of his message. He is not one to advocate 
philanthrophy because it is profitable to the philan- 
thropist. Morality and self-interest, however fre- ^ 
quently they may go hand in hand, are not to be 
confounded. Despite the worldly-wise counsel of 
proverbial wisdom, traders are not meant to be honest 
because it is the best policy, nor employers to be kind 
simply because it pays. There is a moral obligation, 
too, as well in one case as in the other ; and in his heart 
of hearts there is no sane person but acknowledges its 
claim. When we speak of" fair " prices and " just " 
wages we mean something more than a cant piirase. 
In trading men have obligations as well as privileges, 
duties as well as rights. For just as in the demo- 
cratic state all are in part governors and in part 
governed, so in the economic body all are in part 
consumers, and all (or nearly all) in part producers. 
And so, when we are tempted to gloze over the conflict 



THE PROTEST OF RUSKIN 129 

between our own interest and our neighbour's and 
excuse an unfair gain which is another's loss, we 
should do well to remember this common tie of mutual 
service and mutual dependence. Buying and selling, 
producing and consuming, we are all involved in one 
universal game ; and by an unspoken instinct at least, 
if not by compact, we all agreed that this game should 
be played according to the rules. So we have come to 
speak of a bargain as fair or unfair, not because the 
value of this or that is determined by ethics, or depends 
upon some abstract standard of right or wrong, but 
because each, knowing his power as a producer, is 
minded to use it with restraint upon condition that 
his fellows should do likewise. Madam Do-as-you- 
would-be-done-by holds authority in trade no less than 
in other spheres of human intercourse. In our social 
and political life we have long since learnt to reject the 
principle of " might is right " — but we have still to 
learn that economic power is not given us for ex- 
ploitation and naisuse, and that the Ten Command- 
naents do not cease to be operative behind the counting- 
house door. 

To reconcile the selfish clainis of economic interest 
with the altruistic ideals of moral obUgation must 
always be a difficult task — but most difficult of all 
perhaps for the employer. For his responsibility is 
heavier than all others. The man who holds such power 
for good or evil over the lives of hundreds, or it may be 
thousands of his fellow beings, cannot shirk the respon- 
sibiHty of that tremendous trust. He owes it to them 
and to himself and to the State that this trust shall be 
discharged according to the measure of his powers 
and his opportunity. The more honour to him if he 
discharges it well. The market, as Ruskin says, " may 
have its niartyrdoms as well as the pulpit, and trade 
its heroism as well as war." This is in truth a hard 
saying ; but the precepts of all high moralities are 



130 NEW FALLACIES OF MIDAS 

hard. It may seem as though the exigencies of busi- 
ness leave little loophole for the exercise of Christian 
virtues and that every act of buying and selling must 
clash with the Sermon on the Mount. Yet in reality 
this conflict between duty of sacrifice and the interests of 
self are by no means confined to Trade. In every 
phase of life there are claims and counter-claims, both 
of them legitimate, yet competing for our allegiance 
and haling us two ways. The claims of the family 
may conflict with claims of the community, the 
conscience of the individual with prerogatives of State, 
loyalty to Party with obedience to a wider call. There 
is little or no direct guidance in Scripture or elsewhere 
to tell us which of the two should be obeyed or how 
far ; there are no cut and dried formulse, by which 
these puzzles may be solved. Even the most pious 
priest must balance the satisfaction of his own needs 
against the satisfaction of the needs of others. Does 
he starve himself to feed the poor, who will be left to 
read the services in church ? If he gives up his whole 
day to parochial ministrations where will he find time 
for the study of theology, or for intellectual and physical 
relaxation which is needed to keep his body fit and his 
mind alert ? So too the man of business may honestly 
maintain that a motor-car and a comfortable house are 
an indispensable to the efficient performance of his 
duties-^and, in general, the problems which beset his 
path are different only in degree from the problems 
which beset the path of others. To keep up " appear- 
ances " to enter society, educate his children and 
cultivate his mind ; all these are legitimate claims 
upon his purse ; and so long as he shows generosity 
and fairness in his business dealings and decent moder- 
ation in his private habits, his employees v;ill be the 
last to grudge him the satisfaction of such claims. 
But the counter-claim still stands — there is the welfare 
of those whom he employs to be considered. If claim 



THE PROTEST OF RUSKIN 131 

and counter-claim can both be satisfied, no more need 
be said. But if there is a clash of interests and one or 
the other must be sacrificed, then a balance must be 
struck and a choice be made — and we cannot in good 
conscience make that choice upon any but the highest 
grounds. It is for each to see that his eye is single in 
the choosing and that he uses no weighted scales. 



Chapter XII. 

THE RISE OF LABOUR. 

But something more forcible than Ruskin's good 
advice was needed to bring the employers to a better 
frame of mind ; and instead of waiting their conversion, 
whether to Christianity or to common sense, the 
Workers were engaged in forging a weapon of their 
own, and that weapon was the strike. If it is the poor 
man's necessity to offer his labour in exchange for 
daily bread, it is no less his liberty to refuse it. In so 
doing, he commits no wrong. He is under no obH- 
gation to work, if he prefers to starve ; nor is he bound 
by any life-long contract such as circumstances im- 
posed upon the slave or serf. In theory at least the 
modern labourer is a free man ; and whether or no 
it be a wise policy for him to withhold his labour, he 
certainly has as much right to do so, as the farmer to 
withhold his pig from market. The Strike then is in 
essence neither anarchy nor crime ; it is simply the 
normal weapon of one party to a bargain.* It suffers, it 
is true, from one natural and fundamental weakness, in 
that the employer is in possession of the necessities of life 
and the labourer is not. So his bargaining power must 
always be weaker, man for man, than is his master's, at 
worst he is wholly at the other's mercy, as the starving 
man is at the mercy of the man with bread. At best 
he is still fighting an unequal battle, as with blunder- 

* Whether the right to strike may not ultimately develop into a 
dangerous form of monopoly, is another matter — to be discussed 
hereafter. 

132 



THE RISE OF LABOUR 133 

buss against gun. One thing, however, he may do 
to redress the balance ; he may persuade his fellows 
to concerted action. Unity is strength ; and, taken 
in combination, the bargaining power of the workers 
may become equal, perhaps superior to the bargaining 
power of the employer. For, though the employer 
may suffer no serious damage by the loss of a particu- 
lar workman, it must mean ultimate disaster if 
nobody will work for him at all. So from the first it 
has been the worker's desire to promote, as it has been 
(until recent years) the employer's desire to restrict, 
the use of industrial combination. 

Until after Waterloo was fought, and the old order 
of things had passed definitely away, the power of the 
employer held the field unchallenged. During the 
latter half of the preceding century, those new pro- 
cesses of manufacture which brought the Industrial 
Revolution into being, had not merely begun to spread 
terrible distress among the workers, but had indirectly 
caused a serious infringement of their rights and 
liberties. The introduction of new processes of manu- 
facture had led to the widespread employment of 
children and women, and this had very naturally 
aroused the resentment of the adult workers who found 
themselves, temporarily at least, displaced. By way 
of protest they appealed to the Statute of Apprentices, 
an obsolete law of Queen Elizabeth's reign ; and they 
even attempted by some sort of combination to 
enforce its observance. But the employers went one 
better ; and in the last year of the century secured the 
passage of a law by which all such combination " in 
restraint of trade " was positively forbidden. But 
such repressive measures could hardly be permanent. 
More and more the workers became sensible of the 
vileness of their own condition, of the glaring contrast 
between poverty and wealth, and of the inhuman 
attitude of their masters. And along with this growing 



134 NEW FALLACIES OF MIDAS 

discontent, came new and wider opportunities for 
concerted action. Crowded together into the centres 
of trade and industry, they were now better able to take 
counsel together than they had been when scattered 
among the villages and country towns. Education 
too, was slowly but surely spreading ; men began to 
think for themselves ; and ideas bred by the success of 
the French Revolution were taking root downwards. 
A bitterness sprang up between rich and poor which, 
as the century wore on and democracy matured, was 
to develop into a definite antagonism and to range the 
classes in two hostile camps. 

Oddly enough, however, it was to the men of the 
school of Adam Smith that the workers first owed 
their deliverance. In 1824 these champions of 
economic freedom extorted from an unwilling Parlia- 
ment the Repeal of the Combination Laws. The 
workers were now free to combine (though only it is 
true for peaceable discussions), and with that the 
history of Trade Unionism began. Though the 
earliest attempts at combination were short-lived, there 
arose in the course of the Forties several sturdy associ- 
ations, which survived in the face of much difficulty 
and opposition, and many of which (such as the 
Operative Bricklayers' Society and the Amalgamated 
Society of Engineers) are still in being and are known 
as the Old Unions. As yet, however, the battle was 
only half won. The Repeal of the Combination Laws, 
while it allowed men to associate in Unions for the 
discussion of wages and working hours, had yet given 
the Unions no legal status and no protection for their 
funds. One Justice of Queen's Bench openly hinted 
that all combination to raise wages, were its methods 
never so peaceful, was a conspiracy and a crimic before 
the law. Such opinions were little likely to conciliate 
the workers ; and by i860 the Trade Unionists were 
beginning to act with increasing violence. In Sheffield 



THE RISE OF LABOUR 135 

a gunpowder explosion was traced to their agency, 
and a certain saw-grinder, James Lindley by name, 
was murdered by a shot from an air-gun, for breaking 
the regulations of his Union. The country was 
seriously perturbed. A Royal Commission was 
appointed ; and in the sequel the cause of labour won 
a substantial victory. By the Acts of 1871 and 1875 
the position of Trades Unions and in particular their 
right to hold land and accumulate funds, was formally 
recognised by law. These funds might now be used 
at the Unionists' discretion, on condition that an 
annual account of them was presented to the Public 
Registrar. And, provided that the Unions committed 
no act which in a private citizen Would be punishable 
as crime, they were henceforward free to pursue what 
policy they chose. The Charter of Labour was now 
won ; and the efhcacy of combination definitely 
assured, with the natural result that in the last quarter 
of the century the number of the Unions was nearly 
doubled. These new Unions passed rapidly from 
strength to strength ; they found leaders of energy 
and resolution in such men as John Burns, Ben Tillett 
and Tom Mann, the trio who first won their spurs in the 
great Dock Strike of 1885. By continuous warfare the 
Unions quickly gained ground, consolidated their 
position and reinforced their ranks. Since the turn of 
the century the actual number of Unions has diminished, 
but their membership has increased by leaps and 
bounds. From upwards of two millions it rose in a 
dozen years to four ; there are perhaps nearer five 
million unionists, male and female, in the country at 
the present day. All the best-paid trades are 
organised ; miners, bricklayers, boiler-makers, ship 
builders, bootmakers, gas- workers, engineers and 
transport workers, beside a host of others — and even 
before the war they were among the most powerful 
forces in the country, and by constant pressure they 

10 



I36 NEW FALLACIES OF MIDAS 

had again and again defeated the employers and won 
substantial improvement of their lot. But such a 
strong and resolute movement was not likely to con- 
fine its energies for long to the industrial sphere alone 
— and through their Parliamentary representatives 
they had entered the political arena. The Labour 
Party, though numerically weak, made deft use of its 
alliance with the Liberal coalition, and during the first 
decade of the century it was not without its triumphs. 
It has emerged from the crisis of war more formidable 
than ever. At first suspected and despised on account 
of the pacifist tendencies of its leading members, it 
has insisted upon making the voice of Labour heard, 
and when the grievances and even threats of the in- 
dustrial population could no longer be ignored, a 
Ministry of Labour was established ; the Labour Party 
was granted a place in the Cabinet of five ; and who 
shall say what part it may not play even yet in shaping 
the future course of English or European history. 

This political achievement was the fruit of the New 
Unionism rather than the Old. The senior societies 
founded in Mid- Victorian times had been content to 
leave politics alone. They had endeavoured to improve 
the workers' lot chiefly in two ways, first by bringing 
direct pressure to bear on the employers, presenting 
their demands for better conditions, higher wages and 
shorter hours, and finally enforcing them by strike or 
threat of strike ; secondly, by organising mutual 
assistance and insurance among the workers themselves, 
forming Benefit Funds, and out of these relieving the 
victims of accident, disease or unemployment. But 
for a very good reason this second aim became dis- 
credited among the newer Unionists. The heavy 
inroads which the benefit payments might make upon 
the Union funds, were liable to drain their resources 
and reduce their fighting strength. In 1900 the danger 
of financial exhaustion was further increased by the Taff , 



THE RISE OF LABOUR 137 

Vale Decision. A strike had broken out on the Taff 
Vale Railway, and the company took legal proceedings 
against the men for the damage done in the strike. 
The case was carried from court to court ; and finally 
the House of Lords decided that a registered Union 
might be sued at law and was itself Hable for injuries 
inflicted by its members. The decision involved a 
new menace to Union funds, and, pending its reversal, 
the argument for abandoning the expenditure on 
benefits was overwhelming. The upshot was that a 
fresh impetus was given to the alternative policy upon 
which the new Unions had already embarked. This 
policy, as we have shown above, aimed at reinforcing 
industrial pressure by parliamentary action, and at 
achieving by public legislation what private bargain- 
ing could not secure them. Extravagant hopes of 
speedy victory were at first entertained, but were 
doomed to inevitable disappointment. The repre- 
sentatives of Labour formed but a mere handful in the 
House of Commons ; and even these lacked ripe 
experience for the difficult game of politics. None 
the less, whether through the direct agency of the party 
or whether because the new crusade focussed public 
attention more closely on industrial problems, their 
efforts were by no means barren. During the last 
twenty years Act upon Act had been passed, reforming 
and regulating the relations between Capital and 
Labour. Under the Employers' Liability Act masters 
are bound to compensate their men for injuries received 
in carrying out their duties. This and the institution 
of Old Age Pensions have removed the more pressing 
needs for Benefit Funds. Under the Insurance Act 
the members of certain trades are now compulsorily 
insured against unemployment. Many gross abuses 
have been done away. In some ill-paid or " sweated " 
industries (such for instance as that of chain-making) 
the payment of a " hving wage " has been enforced. 



138 NEW FALLACIES OF MIDAS 

Even when the Welsh miners, a far more prosperous 
class, struck for a minimum wage, their victory was 
blessed by the sanction of the law. The Board of 
Trade has bestirred itself to mitigate the evils of un- 
employment and industrial strife (though not always 
in the way which Labour itself would choose). Sir 
George Askwith and its other representatives are 
constantly at their work of reconciliation and arbi- 
tration in disputes. Labour bureaux of information 
have been established up and down the country to 
remedy the frequent hardships of fluctuating and 
intermittent trades. Acts have been passed providing 
for Insurance against ill-health or unemployment, and 
for compensation in case of accidents or injury. One 
way and another, Politics have played no small part 
in industrial evolution ; and at the present time 
Parliament seems to offer greater scope than ever for 
the supporters and representatives of Labour. Though 
before the war their party was losing caste with the 
rank and file, and disappointed prophets declared it to 
be a failure, the day does not now seem so very far 
distant when a Labour Ministry may be seated upon 
the Treasury Bench. 

(ii.) 

But the success which Labour has hitherto achieved 
has not been won without much careful thought and 
elaborate organisation. It is only in recent years that 
the full possibilities of the movement have been 
realised ; and in the meantime both parties in the 
conflict have been busy improving their methods and 
enlarging their resources. The employers on their part 
have not been idle. Seeing how the industrial pressure 
of strikes and agitation was increasing and how through 
its Parliamentary agents Labour had begun to lay a 
faltering hand even upon the reins of political power, 
they could no longer be indifferent to this double 



^ 



THE RISE OF LABOUR 139 

menace. In the early days of Trades Union history, 
the employers' chief safeguard had been the numerical 
weakness of the Unionists themselves. So long as a 
small fraction only of the men were combined against 
them the capitalists felt little cause for real anxiety. 
They needed but to count the cost before embarking 
upon a trial of strength and decide whether the 
temporary dislocation of business was worth their 
while ; the final issue of the struggle was hardly in 
question. There existed still a vast reservoir of 
unorganised labour, upon which they could draw to 
fill the places of recalcitrant unionists ; and, while 
'' black leg " labour was plentiful, no Union could hope 
for complete or permanent success. But, as time went 
on, and the Unions multiplied exceedingly, employers 
took alarm ; and though the strength of organised 
labour is still numerically weak (even to-day it counts 
for barely a third of the industrial population) it was 
felt that the time had come for counter measures. As 
for the men, so equally for the masters, the wisest 
tactics were to close their ranks. Combination can 
best be met by combination. The Employers' Lock- 
out is the obvious answer to the workman's strike. 

In prosperous, chaotic, easy-going England the 
process of combination has been slow ; employers 
clinging to their traditional belief in economic liberty 
and unrestricted competition, have been loth to tie 
their hands. But among other nations, to whom the 
discipline of centralised authority is less distasteful, 
developments have been more rapid and deliberate. 
In Sweden, for example, the two opposing parties are 
now entrenched in two solid Federations, all the 
employers on one side, upwards of half the working 
population on the other. Upon the first hint of serious 
trouble the employers mobilise their forces for a general 
lock-out. In 1906 they won the day merely by threat 
of action. In 1909 the Unions replied by declaring 



140 NEW FALLACIES OF MIDAS 

a general strike. The moment was ill chosen ; trade 
happened at the time to be bad ; so it suited the em- 
ployers' book to close the workshops and the men were 
easily defeated. In other countries, too, analogous 
developments have taken place ; in well-drilled 
Germany the unions of employers known as Kartels, 
have gained considerable power. But, here in England 
open organisation has hardly been attempted. Never- 
theless, as the strength and unity of the Labour 
movement grows, a similar policy will certainly be 
forced upon our manufacturers. They can no longer 
afford the luxury of their old independence. * 

For the Unions, on their part, have not been slow 
to see the advantages of closer co-operation. Up to the 
present there is indeed no central body to direct and 
co-ordinate the policy of the whole movement. Such a 
function is very inadequately performed by the Trades 
Union Congress, half committee which formulates the 
course of Labour's political campaign, half debating 
society, where academic resolutions are discussed and 
enthusiasts can air their high-flown and fanciful 
ideals. On the other hand, some practical steps have 
been taken to draw the bonds together ; alliances have 
already been formed between various unions some- 
times by complete fusion or amalgamation (such as took 
place in recent years between three out of the four 
great Railway Unions), sometimes by a more tentative 
policy of federation. In the first year of the war, 
for instance, the three powerful societies of the Rail- 
way men, the Coalminers and the Transport Workers, 
entered upon a mutual agreement for united action. 
But there are so many objections and obstacles to such 
a course, that complete solidarity is still very far from 

* Within the last twelve months very decided steps have been 
already taken. The prospect of post-bellum competition against 
Germany has stirred the employers to combination far more than the 
threats of Labour could have done. 



THE RISE OF LABOUR 141 

being realised. In the first place, centralisation of 
any sort means officials ; and officialdom has never been 
popular with Englishmen. Unless the methods of 
election and representation are constantly revised, 
the leaders lose touch with the men ; they fail of the 
vigour and audacity needed for constructive action ; 
and Trade Unionism may very easily become as sterile 
and inert as any political bureaucracy. Worse still, 
there is not seldom jealousy between different trades ; 
and, as is only natural, every union is loth to involve 
itself in troubles which are not its own. Finally, as we 
have Said already, the unions are far from having the 
whole force of labour at their back. Partly from 
ignorance of their value, partly from distrust of their 
methods, and dislike of the restrictions they impose, 
even more from inability to pay the subscription to the 
Union funds, the large mass of workers still remains 
outside. All manners of efforts have been made to induce 
them to come in. Those who are members already 
are forbidden in any way to assist non-unionists, often 
to work with non-unionists, and even (during strikes) 
to touch goods which non-unionists have handled. In 
season and out of season, by fair methods and foul, 
the Gospel of Unionism has been preached that by 
whatever means converts may be brought into the fold. 
During a strike a black-leg labourer is made to go in 
terror of his life ; and even the " peaceful picketing " 
allowed by law can often be a very formidable method of 
of coercion. Such tactics, it is true, are a grievous 
violation of the independent labourer's liberties and 
rights. The Unions are hard task-masters ; their rules 
place most tyrannical restrictions not merely upon the 
output of each member's work, but upon the amount of 
each member's wage. There may seem, perhaps, small 
justice in compelling others to submit, against their 
will and, as they think, against their interest, to such 
arbitrary regulations. But from the Unionist's point 



142 NEW FALLACIES OF MIDAS 

of view the non-Unionist is to blame, not he. Who- 
ever underbids his fellow is considered a traitor to the 
sacred cause. Whether the non-unionist does 
unionist's work at a smaller wage, or whether he does 
more work than the unionist at the same wage, it is all 
one. He is playing the employer's game, and stealing 
a march unfairly upon comrades whose interest should 
also be his interest, and whose cause his cause. And to 
make his crime the blacker, he is often enjoying the 
better conditions, better wages and better hours which 
are the hard won fruits of Unionists' exertions. It 
seems a coward's part to profit by the battles which 
others have fought and won, and himself to stand 
aside. 

When, therefore, the Unions set limitations upon 
work and pay, it is not from pure jealousy of the keen 
and strenuous workman. The Unionist is not the fool 
that some people imagine ; and in most cases a reason 
well thought out underlies his seemingly irrational 
procedure. He has fought hard and long for the 
improvement of his wages and now — a far more subtle 
and complex task — his effort is mainly centred upon 
the improvement of his conditions. In this struggle 
constant vigilance and foresight will be needed, or 
he will be thwarted at every turn by the employers. 
Suppose, for example, that he contrives to limit the 
hours of the working-day. The employer at once shifts 
his ground and offers extra pay for overtime work. 
How unreasonable of the Unions to prevent the sturdy 
workman from thus adding to his wage ! Yet is it ? 
Who can say that his gain may not be another's loss ? 
His extra work may enable the employer to dispense 
with the services of the less active. It is probable, too, 
that in the long run wages themselves will be affected. 
The employer will not be able to afford to pay more for 
ten hours' work than he has done in the past ; and 
those who can work but eight will be the first to suffer. 



THE RISE OF LABOUR 143 

So to protect the weaker brethren who would thus be 
put to a serious disadvantage and perhaps lose their 
places altogether, the Unionists may be forced to set 
some limit to this practice and curtail the oppor- 
tunities for overtime for all alike.* Again, to the 
outsider, it seems mere commonsense that when for 
some reason the hands in one department are idle, 
their labour should be used in some other department 
or on some other process. But the normal performers 
of that process do not regard it in that light. They 
merely see their own skill set at a discount, their 
monopoly threatened and themselves perhaps in the 
issue driven out of employment. So Unionists are 
naturally jealous not only of their rights as against the 
employer, but as against the non-unionists as well — 
and in self-defence they have built up a whole network 
of usages and regulations some actually recorded on 
paper, some handed down by tradition. These regu- 
lations differ from district to district, often from shop 
to shop. They were well described by a corres- 
pondent in the Times of January, 19 17, as follows : 
*' They embrace," he said, " not only the standard 
rate of wages, and the length of the normal working day, 
together with arrangements for overtime, night work, 
Sunday duty, mealtimes and holidays, but also the 
exact class of operatives (apprenticed, or skilled, semi- 
skilled or unskilled, labourers or women) to be engaged 
or not engaged for various kinds of work, upon particu- 
lar processes, or with different types of machine ; 
whether non-unionists should be employed at all ; what 
processes should be employed for particular tasks ; 
what machines should be used for particular jobs ; how 
machines should be placed in relation to each other, 

* Unionists' opinions differ on this point, some being in favour of 
restricting " overtime " work, others opposing such restriction. 
Certainly whatever may be urged on behalf of Trades Union action, 
there is a most real danger lest it should in this matter at least, damp 
the ardour and check the ambitions of the genuine hard-worker. 



144 NEW FALLACIES OF MIDAS 

and the speed at which they should be worked ; 
whether one operative should complete a whole job, 
or attend only to one machine or form part of a team 
of specialised operatives each doing a different process ; 
what wages, if any, should be paid in the intervals 
between jobs, or whilst waiting for material, and what 
notice of termination of engagement should be given ; 
whether boys and girls or young persons should be 
employed at all, or in what processes or with what 
machines, or in what proportion to adult workmen ; 
whether remuneration should be by time or by the 
piece, and under what conditions, at what rates or with 
what allowances ; and- — perhaps where it prevailed 
most severely criticised of all, but by no means 
universally existing — what amount of output by each 
operative should be considered a fair day's work, not to 
be considerably exceeded under penalty of the serious 
displeasure of the workshop." 

These and other like concessions wrung from the 
master by the men, or imposed by the men upon their 
fellows, are a striking testimony to the success of Trades 
Union action, but it must not be forgotten that this 
success was double-edged. Upon the one hand, it is 
true, that by nearly a century of effort a marvellous 
transformation has been wrought in the status of the 
working man. But see also how damaging has been 
the cost. In the article above quoted, it was pointed 
out how much production suffered from these hamper- 
ing restrictions ; and how immense has been the gain 
when under stress of war such practices are largely 
swept away. No sooner was the check removed from 
individual effort, no sooner was prejudice and torpor 
replaced by energy and goodwill, new machinery intro- 
duced and old machinery reconstructed or improved, 
than production increased with giant strides. Already 
in eighteen months after the Ministry of Munitions was 
first established, a new Industrial Revolution had taken 



THE RISE OF LABOUR 145 

place ; and the 20,000 establishments Working under 
Government control were *' turning out on an average 
more than twice the product per operative that they 
did before the war." However workmen may grumble 
against employers' profits, whatever they may think 
about the unequal distribution of the spoils, such 
an increase could not but redound to their gain, such 
retardation as had existed, could not but mean their 
loss. 

Nor was this the only defect which marred the 
success of Unionist achievement. Even the proudest 
victory may in the event look very like defeat. The 
minimum wage, for instance, turns out in practice to be 
no unmixed blessing ; for, if the employer is forced to 
pay a statutory wage, he will require in compensation 
a full and adequate return in work ; to retain the 
services of old, weak, or inefficient workmen will not 
be worth his while ; and so, what is gain to some 
unionists, brings dismissal and penury to others. 
Even strikes, however triumphant, may mean time 
wasted, markets lost, trade crippled. In the cotton 
industry the cupidity of the workers looked at one time 
like driving capital out of the business. Even pros- 
perous owners will not embark on new and costly 
ventures, if they know that a fresh demand for higher 
wages will surely follow. Strugghng firms will shut 
down rather than run their business at a loss. If 
trade suffers so must the workman ; and if the work- 
men are ready to " down tools " upon the smallest 
provocation. Trade cannot prosper amid a state of 
constant strikes. More deleterious still than open 
warfare, are those subterranean tactics which go 
under the common name of "ca' canny."* Instead of 

* The term and the practice originated in the Building Trade. 
Masons saw that (as there were only a certain number of houses 
to be built) the quicker the job was done the longer would be the period 
of unemployment that would follow. So they deliberately adopted the 
plan of making the job last as long as they could, forbidding Union 



146 NEW FALLACIES OF MIDAS 

declaring an open strike workmen will adopt the 
insidious alternative of a " bad day's work for a bad 
day's pay." They may even imitate the Italian 
railwaymen, who threw the whole transport service 
into utter confusion by literal obedience to the com- 
panies' instructions ; or with a still more subtle irony, 
they may do their work very slowly and do it very well.* 
When in this way the operatives agree with one consent 
to limit the output by deliberate slackness, the manage- 
ment is helpless, profits drop, and yet the quarrel 
cannot be brought to a clear issue, and once more the 
workers suffer. Like the dog which lost his bone by 
trying to catch its reflection in the water, Labour 
has fixed its eye upon a shadow. To the more solid 
benefits of maximum production it is blind. 

Little wonder then that such violent methods find 
small favour with a large section of the workers. 
Partly from short-sighted ignorance, partly from the 
sane conservatism of the British workman, there is a 
dislike of pushing matters to extremes. Com- 
promise and conciliation are, in general, more attractive 
to them. They prefer to avoid open warfare, if 
differences can be settled by diplomacy. The repre- 
sentatives of masters and men may meet together, 
grievances may be discussed, an ultimatum perhaps be 
delivered. Each part}^ can compute the strength and 
advantage of the other ; each knows what force it 
holds in reserve itself. If war can be averted, it is to 
the interest of both sides to avert it, and more often 
than not, it is found possible to " agree with the 
adversary in the way." The use of conciliation which 

members to lay more than a fixed number of bricks per hour, etc. 
There is always a danger that this form of protest may be used offen- 
sively as well as for the more legitimate purpose of self-defence — and 
in other industries where it might be even more effective and more 
injurious to the public interest. 

* This practice is known as ' sabotage ' or ' feet shuffling. ' 



THE RISE OF LABOUR 147 

in countries like Australia has been forced by law, is in 
England a natural growth. The relations between 
masters and men are often cordial, sometimes there is a 
mutual understanding and a reciprocal policy of " give 
and take." The Boiler Makers and Iron and Steel 
Shipbuilders' Society are even pledged to compensate 
the masters for bad workmanship or breach of faith. 
A similar agreement exists between the Engineers and 
the employers of some districts, where good work is 
rewarded by a premium bonus. But in general, such 
evidence of mutual confidence is rare ; more fre- 
quently such diplomacy is nothing but the velvet 
glove. Labour means to come by its own, and beneath 
the surface there is everywhere suspicion, distrust, and 
preparation for a yet sterner fight. 

(iii.) 

Through whatever phases the industrial war may 
pass, and whatever may be the immediate question in 
dispute, the central issue is eternally the same — the issue 
between the man who has property and the man who 
has none. Until the close of the last century, the rate 
of pay was the chief point over which the fight was 
carried on. Then, as wages rose, and the cost of 
living became less, the ground was shifted and in- 
dustrial conditions were uppermost. But for all that, 
the origin of discontent is not radically different ; and 
it matters little whether the quarrel turns upon the 
rate of wages or the conditions of employment. These 
are but two sides to the same bargain. For a labouring 
man may say, " Whatever work you set me, I will do 
it, and what way you choose ; but the wage is not 
sufficient, you must give me more," or alternatively 
he may say, " I will be satisfied with the wage you 
offer, but unless the character of the work is changed, 
conditions improved and hours diminished, I will do 
no work for you." It is all the same whether a man 



148 NEW FALLACIES OF MIDAS 

demands a larger loaf for his sixpence, or claims to 
receive the sixpenny loaf for fourpence half-penny. 
So for Labour there is but one fundamental problem, 
one grievance for ever unremoved. In a single word, 
Labour feels itself to be exploited. It says, and it is 
never tired of saying, that while the whole burden of 
production falls upon its own shoulders, the profit 
of production goes into the Capitalist's purse. Take 
the case of a Company which employs women to turn 
out ready-made shirts. The seamstress' wage is one 
shilling a day ; the shareholders' annual dividend is 
seventeen per cent. That is an actual case ; but 
perhaps an uncommon one. So glaring a disproportion 
between the shares of Capital and Labour may be 
rare. But the proportion is not the point. Labour 
declares that in every case the profits go to the wrong 
man. It scorns compromise ; and it revolts from any 
formula by which a just proportion might be fixed. 
Not that it denies the value of Capital. How could it ? 
No sane man would pretend that crops can be raised 
without implements, boots or bicycles manufactured 
without machines. All that Labour denies is the right 
of individuals to turn Capital to profit. One man owns 
a factory, a field, a mine. Other men till that field, 
operate that factory, or dig that mine ; yet without 
raising a finger to the work, or, at most, by sitting in 
his office and ordering his foremen and managers about, 
the owner by sheer right of possession annexes the 
chief profits of their toil. If the price of corn or coal 
rises, he alone reaps the benefit ; those who grew the 
corn or raised the coal do not touch a penny of the 
surplus. Labour's doctrine is not vague ; " Wherever 
we look," it says, " we see the sources of production and 
the means of production held as the monopoly of the 
few. We see an idle, undeserving class (a half- 
conscious exaggeration) battening upon an outward 
privilege. In the sphere of politics oligarchic monopoly 



. THE RISE OF LABOUR 149 

has had its day ; democracy and equal rights have 
triumphed. But in the economic sphere, we are still 
bound by the shackles of the industrial feudalism. 
We, the rightful heirs to our country's rich resources, 
are still shut out of our inheritance ; we have no more 
share in the family wealth than if we were the family 
slaves. For this there is but one remedy. Until the 
monopoly is destroyed, and until the means and 
sources of production are taken from the hands of the 
usurpers, there can be for us neither compromise nor 
peace." 

All this is, of course, not the talk of the apathetic, 
half contented millions ; but of the more progressive 
and more vocal section of the Labour movement. 
But if it seems to sound the tocsin of revolution, it is 
not for all that a hare-brained or ill-considered scheme. 
It is no mere catch-word philosophy which neither 
means what it says nor says what it means. For 
behind the inarticulate mass, who find in some ready- 
made phrase a specious remedy for their distresses; 
behind the noisy blusterers, who spout exag- 
gerated half-truths in mass meetings or at street 
corners, there are plenty of hard heads and busy 
brains at work. There are men who read, discuss, 
and think for themselves ; and out of their thoughts 
they weave long-sighted altruistic schemes for the 
regeneration of the world. They see past the petty 
squabbles which concern a mere rise in wages, or a 
point of work-shop discipline ; they look to the 
ultimate goal towards which they conceive organised 
labour to be moving ; they see the irresistible force 
which the masses, aid they but present a united front, 
might wield ; and first and foremost they are concerned 
with the purpose to which that force may one fine day 
be put. On one point they are generally agreed ; 
by fair means or foul the sources and the means of 
production must be taken from the Capitalist. But 



150 NEW FALLACIES OF MIDAS 

(happily for the CapitaHst) they have fallen out among 
themselves over the prospective division of the spoils ; 
they cannot agree to whom the sources of production 
should properly belong. One school contends that 
they are the rightful heritage of the community at 
large, and that the ownership of them should be vested 
in the State. These are the Socialist School, or to 
give them a stricter and less abused title, the Collec- 
tivists. The rival school declares that the worker's 
claim is supreme, and that they must own that which 
derives its value from their labour alone. ** The mine 
for the miners, the factory for the factory hands " is 
the cry of those who for want of an English name 
have borrowed one from France and are called the 
Syndicalists. 

The Socialists are first in the field. The bias towards 
political action, which was the mark of the Newer 
Unionism, naturally lent itself to the Collectivist 
solution. If the best remedy for industrial troubles 
is the intervention of the State, complete reform can 
only come when the State has assumed complete 
control. In the early nineties the so-called Inde- 
pendent Labour Party headed the movement towards 
the socialist ideal. At the Trade Union Congress held 
at Norwich in 1894 a resolution was put forward to the 
effect that " it was essential to the maintenance of 
British industries to nationalise the land, the mines, 
minerals and royalty rents." Mr. Keir Hardie pro- 
posed an amendment to omit the v\rords, *' mines, 
minerals, and royalty rents," and to substitute " the 
whole means of production, distribution and exchange." 
Here was the socialist gospel in a nutshell. The 
amendment was supported by John Burns and Tom 
Mann, and was carried by a large majority. Neverthe- 
less, there were strong dissentients among Labour. 
The representatives of the Old Unions were still a 
vigorous and sturdy lot, placing more faith in indi- 



THE RISE OF LABOUR 151 

vidual effort, self reliance and self-help than in all the 
political nostrums of the Socialists. They maintained 
that such vague recommendations were useless, as 
being outside the range of all practical application. 
They threatened to secede from the Congress, and 
their resistance so far triumphed that Socialism has 
gradually fallen into the background and such nebulous 
proposals as Keir Har die's have ceased to appear on 
the agenda of the Congress. The Socialist Members at 
Westminster remained a handful of discredited cranks ; 
few listen to them now ; and, although during the war, 
the nationalisation of the Railways and the Mines — 
that consummation once so eagerly awaited — has been 
put to the test, it is doubtful whether the result of the 
experiment will make men quite so eager for its 
repetition in the future. 

The fact is that the spell of Socialism was broken; 
the old leadership had lost its hold ; the rank and file 
were tired of their propaganda, as of a too familiar 
tune ; and it needed something new to catch the ear. 
At the same time a new restlessness was stirring in the 
body of Labour. The last few years before the out- 
break of the war were years of bitter fighting in the 
industrial world. There were large strikes in plenty, 
and threats of even larger.* The men were spoiHng 
for a fight on whatever issue. The employees of the 
North-Eastern Railway went out because a guard, 
who was accused of being drunk, had been penalised 
by the Company officials. Prices had meanwhile been 
rising steadily for ten years, and were rising still. 
Wages, which shortly before had been tolerable, were 
no longer adequate to meet the rise. A long trade 
boom had been in progress, yet the workers had them- 

* On a ten years' average previous to 191 1 the annual number of 
strikes was 463, the number of persons afiected 221,058, the number of 
days lost in aggregate about 4 miUion. In 1912, there were 82 1 strikes, 
affecting 1,437,032 persons ; and the days lost reached the astounding 
total of 40,346,400. 

11 



152 NEW FALLACIES OF MIDAS 

selves reaped little solid benefit therefrom. Agitators 
were busy with their fiery exhortations ; let Labour 
arise like a giant refreshed, and no power on earth 
could resist its onslaught. There was, in fine, a new 
spirit abroad in the land ; and it needed only a name 
and a theory to launch a new crusade. Both name and 
theory were supplied by Syndicalism. 

Syndicalism came from France, where already in 
19 1 2 it was a sturdy growth. To be exact, the name 
" Syndicat " itself signifies no more than the English 
"Trade Union"; but the sense has been narrowed 
down and crystalHsed to fit a particular theory. 
According to this theory, bold and decisive as French 
theories are wont to be, the Syndicalist holds that 
nothing matters except business of production, and 
that nobody counts except the producer. From this 
it follows that the employer or capitalist does not count 
at all ; war upon them is a duty war conducted without 
truce and without honour, until the enemy has been 
destroyed. Secondly it follows that the consuming 
public other than the organising producers, does not 
count ; and therefore the State, or rather the Govern- 
ment which represents the whole community and 
defends the interests of every class alike, is equally 
an obstacle in the Syndicalist's path. Whether it 
happens to intervene on the worker's behalf or against 
them, it is an excresence dealing, as they hold, with 
irrelevant issues and diverting men's attention from 
the one fundamental problem of life, production. 
" Men's country," says the Syndicalist, " is their own 
belly." The State and all that is bound up with its 
patriotism and nationality and central government 
must simply cease to exist. From these two doctrines 
put together the Syndicalist concludes that property 
must belong neither to individuals nor to the State, 
but must pass into the hands|of the Producer's Unions. 
It is a fanciful ideal ; it cannot at any point be pressed 



THE RISE OF LABOUR 153 

to a logical conclusion. *' The Mine for the Miners " 
is a fine sounding motto ; but then comes the fair, 
though cynical retort, ** the Patients for the Doctor " ; 
and the thing appears ridiculous. Moreover, how such 
a reversal of our present social structure is to be 
accomplished, is not defined. Somehow or other the 
day will come like a thief in the night ; a general 
strike, a revolution, who knows what ? And in the 
meantime in blind but trustful faith, men must fight 
on preparing ceaselessly, winning here a little, there a 
little, by strike upon strike, and blow upon blow, 
pressing the enemy " sans treve et sans reldche." 

Such a theory may suit the intellectual and ardent 
temper of the French ; but to most Englishmen, as 
stated in its extreme form, it sounds like idle talk. 
They have not that faith in abstract ideals which 
Frenchmen have ; they like to see something for their 
money, or at least some tangible pledge of definite 
results. Nevertheless Syndicalism is a name which 
has caught on. In its saner aspects, at any rate, it 
seems to promise an alternative to Socialism, and is 
free from Socialism's most radical defects. The 
overthrow of Capitalist Society, which would leave the 
control of industry in the hands of the Trades Unions, 
and would bring the whole profit of production into the 
hands of the producers — that seems to many an ideal 
worth fighting for, and an ideal capable perhaps of 
none too distant realisation. Already before the war. 
Syndicalism had taken some hold upon the minds 
of progressive Unions. But during four years of 
war its growth has assumed more formidable pro- 
portions. The strike which in the past had been 
regarded merely as an attack on the employer, im- 
mediately became overt menace to the State, which 
was now directly or indirectly the employer of nine- 
tenths of the working population. Successive 
Governments were not strong enough or courageous 



154 NEW FALLACIES OF MIDAS 

enough to meet the threats with stern suppression ', and 
point after point was conceded to the demands of 
Labour. So Labour finding itself victorious at all 
points, and that almost without a struggle, began to 
realise its strength. A spirit of unrest and defiance 
spread in the storm centres of industry, the cities of 
Northern England and South Scotland ; vague 
revolutionary theories which previously had been 
confined to agitators and rare enthusiasts now became 
popular catch-words ; and chief among them was the 
battle cry of Syndicalism ; — the means and sources 
of production for the producers. Syndicalism is not 
yet fully fledged ; it has still to develop a definite 
programme and formulate its policy of action. Never- 
theless, in its more fanciful exaggerated form, it is a 
menace to the Capitalist which the Capitalist dare no 
longer ignore. More than that, it is a menace to the 
stability of our whole social organism, which since 
we have seen the unhappy chaos of the Russian 
Revolution, has assumed a more real and formidable 
shape. Sooner or later (and perhaps very soon), with 
it or with Socialism England will have to reckon. Both 
seem to offer a solution to a situation which cannot 
be permanent, which is already strained to breaking 
point, and which at any moment may become in- 
tolerable. In industrial warfare a temporary truce 
may be patched up ; some balance of advantage may 
be struck. But if Labour is resolved upon a fight to a 
finish, then a fight to a finish there must be. Let us 
know now what Labour stands for ; what is its 
concrete policy. If it hopes to win the fight, it is none 
too early to declare its terms, and to state what use it 
will make of victory when victory is won. For this is 
no longer a philosopher's question, no matter of passing 
academic resolutions or painting imaginary Utopias. 
Socialism,'^through the centrahsing influence of war's 
necessities, has already become a part of our political 



THE RISE OF LABOUR 155 

structure. Syndicalism is debated in a hundred 
towns, vaguely perhaps, but none the less in deadly 
earnest. Whether either or neither will eventually 
triumph, the future alone will show ; but it is in the 
present (and that without delay) that the cost of both 
must be counted. 



Chapter XIII 

SOCIALISM 

(i.) 
Socialism to the comfortable and ignorant is a word 

covering (thought not excusing) a multitude of sins. 
It is used and misused in a hundred different ways, now 
for one thing, now for another, but always as signifying 
something which, if not positively immoral, is at least 
to be regarded with ridicule or suspicion. At one 
time, it is a scheme for dividing the world's wealth into 
an infinite number of equal parts, to be distributed, 
like bread-tickets, among an infinite number of 
individuals. At another time it is simply a euphemism 
for wholesale robbery, whereby the rich man's money 
is to be handed over to the poor. Sometimes it is 
used in sorrowful contempt for any man whose sym- 
pathies are touched by the distresses of the '* lower 
orders." Even the disciples of Socialism themselves 
are in no very strict agreement. Communists, Collect- 
ivists, Comtists, and Revolutionaries, are all gathered 
under the shelter of its cosmopolitan creed. The very 
course of the movement is as diverse as the history of 
religious sects. It pullulates like the monster of a 
hundred heads ; no sooner is one destroyed by the 
sharp sword of logic or by the slow strangulation of 
political events, than two others spring into its place. 
For, truth to tell, Socialism is not so much a set 
system, as an enthusiasm and an ideal, and like the 
ideals of religion, it finds a new formula according to 
the temper of the age, and the nature of the soil in 
which it grows. In its widest sense, then, Socialism 
is simply a belief that all men are brothers and should 

156 



SOCIALISM 157 

behave as such. It took just on eighteen hundred 
years of Christianity, before men thought of asserting 
this principle in any practical manner ; and when they 
did, they signalised their access of brotherly zeal by 
establishing a military despotism and cutting off a 
large number of their brothers' heads. But though 
the banner of the Revolution was inscribed with the 
words Liberty, Equality and Fraternity, and though 
Rousseau preached the ultimate rightness of pure 
Democracy, it is to the aftermath of the Revolution 
rather than to its actual course, that we shall look for 
any definite scheme of Socialistic practice. With two 
French writers in particular, Fourier and Saint Simon, 
the theory began to crystallise. Both were dreamers. 
Utopians, men of a naive and optimistic philanthropy, 
In the Gospel according to Fourier salvation was to be 
found through a new form of political unit. By living 
together in small groups or communes (counting under 
two thousand members), men could, he thought, 
improve their lot, chiefly through a new harmony of 
organisation which would supplant the wasteful 
discord of competition. Fourier did not himself 
propose to suppress all inequality arising from private 
ownership ; but more thorough-going Communists 
have not shrunk from asserting that such a society 
should live as the family lives, each member, that is, 
giving his work for the good of all, and receiving each 
according to his need. No doubt it is a beautiful 
ideal ; but to imagine that under such a system the 
individual would set a voluntary limit upon his 
-appetite, requires an almost fanatical belief in the 
goodness of human nature. And, though, in point of 
fact, communities much on these lines have actually 
existed and even flourished in America, their success 
has only been achieved by the strictest enforcement of 
discipline, and under the spiritual stimulus of strong 
religious enthusiasm. 



158 NEW FALLACIES OF MIDAS 

Saint-Simon's proposals were more plausible ; and, 
although in his own day the man himself remained a 
prophet without honour, yet the school of thought 
which he founded was long popular in France. Instead 
of proposing to distribute the wealth of the community 
according to the individual's own estimate of what 
he wanted, Saint Simonists declared that each should 
receive according to the measure of his deserts. 
Desert was to be judged solely by the function which 
the man discharged, and all forms of inherited wealth 
were to be ruthlessly abolished. Saint Simonism, in 
fact, so far from asserting the complete equality of men, 
made rather for an aristocracy of merit and is, as 
will be seen, not far removed from the Collectivist 
ideal. 

But while these two Frenchmen in the quiet 
seclusion of their studies were building their quaint 
castles in the air, there was born a man of different 
genius and of other race. Karl Marx, the young 
German Socialist, was a curious mixture of philosopher 
and prophet ; with a scientific thoroughness and 
astounding breadth of vision, he took a wide historical 
view of the State's development, by which he linked up 
the Socialist future with the Capitalist present ; 
Socialism, in short, was not for him a subject for vague 
speculation or philanthropic experiment ; it was an 
essential and inevitable phase in which the economic 
evolution of Society must one day culminate. In 
his master-work. Das Kapital, he showed how the 
wealth of industrial magnates, gathering as it went, 
both strength and size like some vast snowball, was 
destined to crush the working class beneath its weight, 
how, as the rich became momentarily richer, the poor 
became proportionately poorer ; and how, one fine 
day when the position should become intolerable, the 
masses would arise with one accord and set the world 
to rights. 



SOCIALISM - 159 

Marx's forecast has been demonstrably untrue to 
fact ; even if the rich have become richer the poor have 
certainly not become poorer. But (whether his 
theories are false or true) Marx does not stand or fall 
a philosopher alone ; for he was also a leader of men. 
Though he professed to be no revolutionary firebrand, 
he set himself to awaken the working classes to a 
consciousness of their plight. Driven out from 
Germany an exile (for he took part in the Revolution 
of '48) he carried the message of class warfare to 
Paris and to London. From here he issued his famous 
summons to the world, " Workers of all lands, unite ! " 
and his enthusiasm bore fruit in the foundation of the 
International Working-men's Association. The" Inter- 
national " is a league wherein all differences of creed 
or country are sunk in the common fight against 
oppression. So, by a curious irony of fate, it was a 
German who first established the one outward and 
visible expression of the universal brotherhood of 
man. This is Marx's chief claim to greatness. His 
name and theory became words for Socialists to 
conjure with ; and he gave to Socialistic agitation 
an impetus and a solidarity which have made it a living 
force in Europe, and which in our own day has been 
reborn in the proposal for a Socialist conference at 
Stockholm. 

It was not, however, till Marx himself died and 
had been buried in Highgate cemetery, that the fruits 
of his work began to be plainly visible in England. 
In the thirties it is true. Chartism had made its protest 
against industrial tyranny, and had even formulated 
a remedy in its democratic " Charter." About the 
same time Robert Owen had thrown out an ideal and 
had miade experiments in his own Lanark Mills. 
Then in the early eighties the revelations of Henry 
George in his " Progress and Poverty " shocked men 
into action, and set them thinking over his violent 



i6o NEW FALLACIES OF MIDAS 

denunciations of Rent as the root of every evil. 
Soon after Mr. Hyndman and certain disciples of 
Marx formed in London the Social Democratic 
Federation. From these a small band broke off 
calling itself the Socialist League and counting among 
its members William Morris, who to the consternation 
of his artistic friends took to attending Socialist Clubs 
and even addressing crowds at the street corners. 
Thus the English movement was definitely launched ; 
its subsequent development has been a curious and 
characteristic blend of high souled idealism (less 
visionary than the French) and political agitation 
(more practical than Marx) . On the one hand, we have 
had the Fabian Society, seeking by pamphlets and 
debates to educate the public mind in the science of 
economic health ; while the Independent Labour 
Party, with a leg as it were on both stools, strives to 
uphold in Parliament the pure flame of Socialistic 
theory. On the other hand, we have the Labour 
Party proper, an unholy alliance, as some think, between 
philosophic Socialism and militant Trades Unionism, 
but an alliance which has at least succeeded in effecting 
many measures of practical reform. This has not 
been accomplished without some sacrifice of principle 
and some contamination with Liberal policies. But 
indeed. Socialism is so vague and many-sided an ideal 
that it may well be what you choose to make of it, 
according as you try to fix your eyes on the head hidden 
among the clouds or on the feet with which it still 
keeps touch with material earth. As expounded by 
the former Leader of the Labour Party, Mr. Ramsay 
Macdonald, it stands for every blessing, perfection, and 
privilege which this world has ever known or ever can 
know. It alone can bring perfect freedom to the 
individual ; it alone can offer him such a form of 
private property as shall enable him to a true realisation 
of himself ; it alone knows how to organise industry, 



SOCIALISM i6i 

cultivate genius, encourage art. In a word Socialism 
is a sort of Paradise come to earth — a state of being 
fit only for a celestial choir of angels. Now we all 
want liberty, art, culture and efficiency ; what we do 
not know is how to get them. The Higher Social- 
ism may well be matter for pious aspiration ; but 
it does not help us much in the serious discussion 
of present-day problems. At one point however 
Socialism has come forward with a practical suggestion. 
When at the Norwich Congress Mr. Keir Hardie 
proposed the nationalisation of " the whole means of 
production, distribution and exchange" he was in a 
strict sense talking as a Collectivist, but though this 
programme would satisfy but one side of the Socialist 
policy only, it is by so much the most tangible and 
practical side that it may rightly be regarded as the 
central plank in the Socialist platform. Here at any 
rate we are on solid ground. 

(ii.) 

When a man complains of the profit which a mine- 
owner makes out of his rnine, it is plain that he may 
have two motives for annoyance. He may be 
grumbling because he is a miner and his wages are too 
low; or he niay be grumbling because he is a house- 
holder and pays too much for coal. Socialism, the 
all embracing, will sympathise with both grievances ; 
for it is concerned with the interests of miner and 
householder alike. Collectivism concerns itself entirely 
with the latter, with the consumer not with the 
producer. It purposes to take the mine from 
the CapitaHst and entrust it to the keeping of the 
State. The State representing the citizens at large 
and responsible to the whole community, not to a single 
class, will study the public convenience, and furnish 
forth the coal for the consumer's benefit; and no doubt 
the consumer will benefit handsomely thereby. There 



i62 NEW FALLACIES OF MIDAS 

being no longer a mine-owner to take his toll of profit, 
the State can sell the coal at cost price ; or if it niakes 
a profit on the business, the surplus can be turned to 
public advantage some other way. The whole scheme 
is delightfully simple. There can be no doubt that it 
would work ; it has already been applied to many 
branches of production. The Postal service is run by 
"the State ; so is the Telephone ; and in France some 
portions of the Railway System. We can see the 
same principle at work on a small scale elsewhere ; 
in many towns the municipal authorities own and 
control the Gasworks, Electric Lighting, Tramways, 
and even the Milk supply. If we can nationalise 
the Railways, we can nationalise the Mines ; if the 
Mines, then the Land also ; and that done, it is an 
easy and tempting progress to the nationalisation of 
factories, shops, shipping, theatres, houses, in short 
everything. The State, emulating the comprehensive 
efficiency of some great store, will undertake to supply 
the citizen's every want, from the lease of a country 
mansion to the purchase of a twopenny toy. Nor will 
such a State neglect to round the system off by organ- 
ising the life and habits of its members ; from com- 
pulsory insurance and compulsory education it will 
pass to compulsory temperance, compulsory work, 
and, as like as not, compulsory eugenics. For it is to 
the State's interest (that is the consumer's) to secure 
a healthy, industrious, temperate set of workers. 
Organisation is a passion which grows with habit. 
Once started the Collectivist State cannot easily draw 
back ; and it will not leave much to Providence or 
chance. 

There is not space here to discuss at length the 
methods by which the State may displace the owners, 
nor to pass judgment upon the ethics of expropriation. 
First, there is the open method. It may take all at 
a blow by forthright confiscation ; or filch them by 



SOCIALISM 163 

the more insidious but equally obvious process of 
oppressive taxes. In either case it will take its stand 
upon the plea of the common good. That is the excuse 
which served to recommend the confiscation of the 
monasteries, and the disendowment of the Welsh 
Established Church. The State, SociaHsts say, is 
greater than the Individual, who owes everything he 
has to the state's bounty and protection. Therefore, 
say the Socialists, the State can do what it wills with 
its own. They will argue, for instance, that the high 
value of your land in Hampstead is derived from the 
presence of the people who rent it, and that therefore — 
a very singular contention — the People with a large P 
are entitled to annex your profits, because it is they 
have caused it and not you. It is on this somewhat 
dubious pretext that many are eager to-day to tax the 
landowner out of existence — but this is a flimsy 
subterfuge for evading moral issues. Such a plea is no 
better than the Spartan's who was wont to justify 
picking and stealing because he had previously invented 
an hypothesis that private property should not exist. 
But the state itself happens to depend upon a directly 
contrary hypothesis ; namely, that individuals are 
bound to respect their neighbour's rights ; and the state 
if it defies the moral law itself, will be cutting the 
ground from under its own feet. So in all likelihood it 
will prefer to adopt a show of legality and buy the 
private owners out. This is the scheme which now 
finds favour with the majority of modern Socialists. 
For precedent they are able to quote such a tran- 
saction as the buying out by Government of the Private 
Telephone Companies in 1907 : and that the scheme 
would in its initial stages be workable enough, we 
need not doubt. The first step would be to find the 
money for the purchase. So large a sum could hardly 
be raised by ordinary taxation, but a public loan could 
easily be issued : and this would be done. As, how- 



i64 NEW FALLACIES OF MIDAS 

ever it is probable that the old proprietors, with the 
purchase money in their hands, would largely invest 
it in this loan, the net result would be that they would 
have exchanged their old holdings for Government 
stock ; and that instead of their large and perhaps 
precarious profits, they would now exact, as creditors 
of the nation, a fixed return of interest from the State. 
The second step would therefore be to relieve the 
exchequer of this incubus : a sinking fund would be 
formed out of annual revenue, whereby the loan might 
be paid off. So far, so good. This plan also would 
work smoothly enough at first : so long as the capitalist 
could find fresh uses for the money so refunded to him, 
he would have no just cause for complaint. But, if the 
State were able (a contingency we well may doubt) 
to extend this legitimate method of expropriation to 
all forms of property, then the game \vould be up, for 
in that case it must come to confiscation in the end. 
The private owner may be willing for a time to accept 
whatever price the State may offer, but only so long 
as he can find means to dispose of his capital elsewhere. 
Once he sees every channel of investment threatened, 
it will be futile to accept banknotes which he can turn 
to no new purpose. For though the sum which the 
state pays him money down, might well keep him in 
clover for his Hfe-time, he will not be able to trade with 
it. Not only will he have lost his peculiar privilege 
of " profiteering," but he will not be able to increase his 
capital nor to bequeath any permanent subsistence to 
his children ; Capitalists, seeing the sources of their 
gains in jeopardy, will raise an outcry like the silver- 
smiths of Ephesus ; and will oppose the further pro- 
gress of reform with all their power. Voluntary sale 
will cease ; and their goods must needs be taken from 
them by force, as though from criminals. It is 
arguable, I suppose, that it is a crime against Society 
to be rich. At any rate it is easy -for the SociaHst to 



SOCIALISM 165 

say that Capitalists have done nothing to deserve 
their fortune. But it is hardly consistent to stop 
there ; if Capitalists' brains are not deserving of 
reward, Socialists' brains are no more so. At this 
rate, there can be no reason under heaven why the 
Socialist State should distinguish between the services 
of its citizens, nor why it should pay its Prime Minister 
more highly than its sweeps. Let us forthwith 
institute the commune and have done with this talk 
of deserts and rewards ; under that delightful system, 
everybody would presumably be happy, free to do 
what he likes, and to get what he wants, and there could 
be no reason thenceforward to grudge a neighbour 
any mortal thing — except his appetite. 

It is usually considered bad ethics, to condone the 
immoral means in anticipation of the moral end. Yet 
we cannot ignore that in the larger movements of 
history this obnoxious principle has stood justified 
by its results. The overthrow of tyrants, and 
oligarchies, the emancipation of oppressed peoples, 
even the beneficent supremacy of great empires, 
these have not been accomplished without worse things 
than robbery. If Socialisni can make good one half 
of the beautiful things that it promises, we might well 
be glad to draw a veil over its less lovely features. 
It is indeed an alluring picture, this state of co-opera- 
tion and brotherly love. It has much to offer besides 
the abolition of Capitalists. At one stroke we should be 
rid not merely of profiteering, but of the competition 
itself and all its attendant curses, the whole meaning- 
less struggle to outbid or undersell, the wasteful, ugly 
habit of advertisement, the frauds, and duplicity of 
commerce ; and above all we should be rid of the 
unnecessary duplication of single functions. All this 
would disappear under the directions of a wise and 
centralised control. We should no longer have 
" twenty milk-carts rattling down the street where one 



i66 NEW FALLACIES OF MIDAS 

would do." Railway companies would not run their 
trains to miss a rival company's connections ; nor 
would traders waste their energies to encompass the 
ruin of another firm. Already in the operation of the 
great trusts we can see something of the economy 
which unity of organisation could eSect both in effort 
and expense. 

But Socialism stands for much more than a good 
business proposition. Far more than mechanical 
efficiency, it counts upon a spiritual change. For 
co-operation brings out all that is best in man ; set 
free from the demoralising pursuit of personal 
aggrandisement he would be uplifted by the conscious 
effort to serve the common good. Altruism and honest 
emulation would supplant the old jealousies ; and 
where no bar of class or privilege survived, each would 
find a field open to his talents and a new happiness of 
self-realisation. It is not for nothing that many have 
seen in Socialism the true goal of Christianity. 

Now we cannot pry into the future ; shown such a 
picture of posterity we cannot point to this or that 
and say for certain " It will " or " it will not be so." 
Nevertheless taking human nature for what it is, we 
may safely cast a doubt on some details of the picture. 
For you may set the whole social fabric topsy-turvey, 
but man himself will not quickly change. He will still 
have appetites ; he will still be found discontented with 
what he has and eager to get more. Therefore, since 
the socialistic state must still reward the services of 
its members, must still, that is, pay wages, unregenerate 
man will do his best to get the most he can out of the 
State. At first perhaps he will present his demands 
to the authorities, confident of receiving their 
indulgent sympathy. He will be rudely shocked. 
For the authorities, intent upon keeping prices low in 
the consumer's interest, v/ill summarily dismiss his 
claims. So, faute de mieux, he must fall back on 



SOCIALISM 167 

his old methods and organise the strike. But here 
again he will be met and countered ; the public will 
stand no tampering with its supplies ; the government 
will be called upon to take strong measures, and the 
workman will be ordered back to work, censured for 
conspiracy against the common weal, and, if need be, 
penalised for his insubordination. The servant of the 
State cannot strike with any prospect of success ; for 
the State is a mightier master than any capitalist 3^et 
born. This M. Briand proved when the railway men 
of France went on strike in recent years; he ordered a 
mobilisation of the army, commandeered their services 
as conscripts under military law ; they dared not 
disobey under penalty of court-martial and the strike 
was broken. So too in the Belgian strike of 1902; in 
this case the bourgeois mobilised their civil forces, ran 
the necessary services of the community themselves, 
and showed the producers that their threat could be 
parried by the united efforts of the consumers. Far 
more powerful would be the control of a Socialist 
Government, with the whole force of law and consti- 
tution at its back. It may be of course that the State 
will be a more reasonable master than the employers 
were, and that the demands of the workers will in 
every case be granted (though that has not been the 
experience of public servants in the past, and even in 
our own Post Office there have been threats of strike), 
but that will avail nothing unless the demands of the 
workers are reasonable too ; and what ground have 
we for assuming that they will be. Men will never 
be satisfied on this side of Doomsday ; and it is far 
more probable that failing by this method, they will 
turn to another more effective and more insidious. 
Although they will have lost their power of industrial 
independence, ' at least they will not have lost their 
voter's privilege. As constituents, they can still bring 
pressure to bear upon their members and through them 

12 



i68 NEW FALLACIES OF MIDAS 

upon the Government. In our own day such a thing 
is not unknown. In the Government dockyards 
workmen and groups of workmen have certainly had 
recourse to political jobbery in order to advance their 
interests. Under the Socialist state where every man 
and woman would be a public servant, the danger 
would be increased a thousand-fold. The largest group 
of industrials, were their claim to a hearing great or 
small, would hold a weapon of tremendous power over 
the heads of unwilling ministers. In the constitu- 
encies, seats would go to the man who bid highest 
in promises of support to local industries ; Parliament 
if not openly corrupted, would become the platform 
of industrial strife. Political jobbery and wire pulling 
would outdo the evils of industrial competition. 
Larger issues would be lost to sight, as already some of 
the younger states of the world, where Labour govern- 
ments are in control, have learnt to their bitter cost. 

That is one danger, which threatens Socialism's 
success ; but there is another to follow. When the 
direction of industry is taken out of the hands of 
private persons, it must be put into the hands of 
Government ofhcials. Now Government offices may 
not be as black as they are sometimes painted. But 
it is clear enough that where not only every clerk, but 
even every head of a department is responsible to 
somebody above him, enterprise will be at a discount. 
The official cannot act without leave or upon his own 
initiative. Before he can travel forth along some 
new path, he must have his passport vised. Checks 
and counter checks innumerable will be devised to 
regulate his actions ; rules and red tape bind him hand 
and foot, so that little by little he falls into a habit of 
routine and fulfils his duty by the filling up of forms. 
Fear of public displeasure too will daunt him in every 
project. The fatal error of the official is to be caught 
blundering. 'He has Httle to gain and everything to 



SOCIALISM 169 

lose by taking risks. His strength like the strength of 
Egypt of old is to sit still. This tendency towards the 
stagnation of oihcialdom is strong ; but fortunately 
it is not inevitable. We ourselves happen to be living 
in a progressive age ; we have go-ahead ministers ; 
the Government Departments have put their shoulders 
boldly to the wheel ; and they will have much to show 
for their exertions. In Education, Labour control, 
Public Health, and what not, we shall likely enough see 
wide and beneficent reforms ; for centralisation creates 
a motive power which private enterprise cannot 
command, just as one man at the helm can steer the 
ship more skilfully than the ill correlated efforts of a 
hundred oarsmen. So there can be little doubt that 
the state of the future will gather more and more 
threads into its own hands. Its ministers will wield a 
tremendous power for good, and so long as their 
enthusiasm is sustained and the crusading spirit is 
upon them, they will effect changes which, under the old 
system of laisser faire, we waited for in vain. But 
none the less behind the knight errant of state control, 
there sits the spectre of bureaucracy. As the field of 
action becomes wider and the touch of personal 
inspiration less vital and direct, then comes the chance 
for paralysis and stagnation to return. State manage- 
ment is by no means a sure passport to efficiency. 
In France the Chemin-de-fer de I'Oueste has been notori- 
ously ill run ; and municipal undertakings are not as a 
rule more successful than those managed by private 
enterprise. Trade conducted as one gigantic national 
concern would be a perilous adventure ; and no pro- 
phecy can guarantee that the sources of enterprise and 
invention would not be sapped, — not altogether because 
SociaHst man would lack the old stimulus of private 
property. It is clear, the SociaHst would say, that 
already the vast majority of mankind do labour 
without the smallest prospect of owning anything. 



170 NEW FALLACIES OF MIDAS 

As the supreme direction of commerce and production 
passes more and more into the hands of the few, the 
number of those who make direct profit out of their 
exertions is immeasurably diminished. Yet for all 
that bank directors, factory foremen, industrial 
managers, working for a fixed salary, are not less 
industrious than the shopkeeper or the independent 
trader whose incomes depend solely upon the success 
of their own exertions. Even waiters can be attentive 
without the expectation of a tip. Under Socialism, 
moreover, invention and enterprise might easily be 
encouraged by a suitable system of rewards ; and if the 
collectivist ideal were not too rigidly maintained, some 
scheme of profit sharing would not be difficult to 
introduce. But, apart from these incentives to good 
work, a high standard of industry must depend most of 
all upon a widespread sense of duty. That motive 
must supplant the lower motive of private gain ; 
without it Socialism is bound to fail. And indeed, if 
stagnation is to be avoided, it can be done upon one 
condition only — that the people as a whole, not merely 
its higher officials, preserve their vigour and manly 
independence. Countries get, as it is said, the Govern- 
ment that they deserve ; and the higher control will 
remain progressive, only if the nation itself remains 
alert, vigorous and ambitious — alert in the choice of 
its representatives, the control of their policy ; vigorous 
that it may infuse fresh blood into their ranks ; 
ambitious always to strike out fresh lines of action, and 
to improve upon their best. Now under the Socialist 
order of things, every man, woman and child will be 
a servant or dependant of the State. They will not 
all wear brass buttons and peaked caps ; but none the 
less they will look to the State as master and lean upon 
it for support. Not merely will the great captains of 
industry and trade have passed away ; but the personal 
independence of the middle class, the small shop- 



SOCIALISM 171 

keeper, the yeoman farmer, the professional man will 
have vanished with them. Those many millions, too, 
whose life is even now a life of dependency and service, 
will become more dependent and not less. To-day the 
men exercise some freedom at least in the choice of 
the trade they shall follow, the master they shall serve, 
and the age at which they shall retire. But, once 
caught in the vast organisation of a State intent upon 
turning its human material to the best advantage, they 
will find themselves mere ciphers in the hands of others. 
Marked out at school for the trade or profession to 
which their capacity best suits them, they will be 
drafted out by the centralised bureaux of employment, 
and set into their appointed place. The term of their 
working days will be fixed by a system of pensions and 
superannuation such as is now current in our civil 
services. I do not say that their lives will be less 
useful or less happy for all this ; but it is certain that 
their spirit cannot retain its old independence ; their 
individuality must suffer. Character is not to be 
manufactured by methods of compulsion. A man 
learns most and best not what he is made to do, but 
what he does of his free choice, from his blunders 
as well as from his successes. Take away his liberty, 
and he will never gain self-control. Deprive him of 
money and he will never learn to be honest ; forbid him 
to touch drink and he will never acquire the habit of 
true temperance. Wine, as the Spartans used to say, 
is the best schoolmaster. So v^ith the strong wine of 
economic liberty. 

And this is what the Socialist, in his hurry to reform 
mankind, too frequently forgets. Consider Lloyd 
George's Insurance Act and its effect upon the people. 
So long as membership to a Friendly Society was 
optional to a man, he was free to pay a subscription or 
not as he chose. Now he has no such choice ; but 
though we have forced him to save, we have not 



172 NEW FALLACIES OF MIDAS 

taught him thrift ; for virtue is something more than 
the negative of vice. Or consider the case of com- 
pulsory education with its attendant schemes for 
public meals for the children. Excellent as these are, 
there can be no doubt that the parents lose the sense 
of their personal responsibility for the child. They 
tend to regard the child's upbringing as mainly the 
school- master's business and are ready to wash their 
hands of the nuisance. There is no question here 
concerning the benefit of these two measures ; but 
however beneficial and however necessary compulsion 
may be, it none the less has its dangerous side. 
It is true that by removing the weight of certain 
responsibilities from the individual's shoulders, the 
State can set him free for better and higher activities. 
By securing his health, his proper education, it enables 
him to lead a better and more useful life in other ways. 
That is a fair defence for compulsion ; but there must 
be a limit to the argument ; for as the Socialistic State, 
eager to see all its members behaving as they should, 
encroaches more and more upon the various sides of the 
individual's life, it must by that very process turn him 
more and more into a machine, and once his sense of 
responsibility is gone, his power of initiative must 
surely follow. 

It is the common error of reformers to imagine that 
the shortest road is always the best way home ; and 
the Socialist has forgotten that it is the seed which 
matures most slowly, that yields the richest harvest. 
His state would, it is clear, bear early and abundant 
fruit. Its efficiency would be beyond question ; but 
even efficiency may prove rotten at the core. The 
German people have organised their country's wealth 
both human and material with unparallelled efficiency ; 
yet throughout the war the greater faculty of initiative, 
invention and resource has not been upon the German 
side. It may well be doubted whether in the long run 



SOCIALISM 173 

they would even have out-stripped their rivals in the 
field of trade and manufactures. But even had they 
done so, such a victory would have been purchased at 
too great a cost. There are things in life of higher 
value than material prosperity ; and the man or 
nation that sets success before conscience, and effi- 
ciency above character, is signing the fatal compact of 
Faustus. 

Socialism may fairly claim that by its democratic 
institutions it would avoid the grosser errors of the 
Germans ; but just because it could never be content 
to leave the individual to himself that he might learn 
by his blunders and misfortunes the very lessons which 
life is meant to teach him, it is certain that Socialism 
could never raise him to the level to which he is meant 
to rise. The spirit of service and self-sacrifice which 
Socialism upholds, is a fine and noble ideal ; but the 
service and the sacrifice must come from within a 
man's own self. For no political system can make 
human beings good or happy ; that they can only 
accomplish for themselves ; and before they can 
accomplish it, they must have been educated to the 
part, learning in the hard school of experience, and 
exercising their own liberty of choice. And on the day 
when the lesson shall have been learnt, there will be no 
need for Socialism any more ; the millenium will have 
arrived. 



NOTE ON CO-OPERATIVE SOCIETIES OF 
CONSUMERS. 

It would not be right to close this chapter without 
making some reference to the great practical experi- 
ment in Socialistic methods which has been conducted 
by the Co-operative Societies of Consumers. Though 
due to the private enterprise of individuals, and being 



174 NEW FALLACIES OF MIDAS 

therefore in no sense a preliminary instalraent of 
State Socialism, this organisation is nevertheless 
in essence Socialistic and not Syndicalist : for, as its 
name implies, it is designed first and foremost to 
promote the interest of the consumer rather than the 
producer : and for this reason it is to be distinguished 
from the parallel movement known as co-operation of 
producers, with which it is frequently coupled. 

The method of these Societies will perhaps be best 
understood by looking back to their prototype and 
model, the Society of the Rochdale Co-operators, which 
not only gave the earliest impulse to the movement, but 
also laid down in its main outline the policy that has 
been followed ever since. In the year 1844, twenty- 
eight Rochdale weavers clubbed together to form a 
Co-operative Store. Each saved the modest sum of 
twenty shillings and upon this tiny capital the store 
was opened. The advantage at which the weavers 
aimed was nothing less than the elimination of the 
professional retailer and the diversion of the pro- 
fessional retailer's profits into the pockets of the 
members. Goods were bought, and were sold to 
members across the counter (one of the v/eavers himself 
acting as salesman in the first instance) not at cost 
price, but at the rates then prevailing in the neigh- 
bourhood. The surplus profits of the business were 
then reckoned up and at fixed intervals distributed 
among the members each receiving in proportion to the 
purchases that he had made. This important and novel 
principle proved then and has proved ever since so 
effective a means of inducing members to do a maxi- 
mum amount of business at the store, that it has been 
generally adopted by the numerous Societies which 
have followed the lead of the Rochdale pioneers. 
For the idea took strong hold on the working classes. 
By 1904, there were nearly fifteen hundred societies in 
existence. Over two million members were subscribing 



SOCIALISM 175 

their savings to the capitalisation of these concerns, 
the working funds of which then ran to thirty millions, 
the annual turn-over to sixty million pounds. The 
movement is growing still : and in the first decade 
of this century alone, the membership increased by 
one half. It draws its adherents chiefly from among 
the better paid workers : for the very poor have no 
money to invest ; the rich prefer other channels for 
investment. Its activities which were at first con- 
fined to the retail trade only, have gradually been 
enlarged. The first step was a very natural extension 
to the wholesale trade. To this the Societies were in 
a manner forced, partly because the various stores 
were found to be buying against one another in the 
wholesale market, partly because the independent 
retailers, jealous of their too successful rivals, were 
trying to press the wholesale merchants to a boycott. 
The upshot was that in 1864, the Co-operative Whole- 
sale Society was founded : to be followed a few years 
later by the establishment of a similar society in 
Scotland. But this step soon led to another. Inde- 
pendent as they now might be of the wholesale 
merchant, the societies were still at the mercy of the 
manufacturer, and, gradually, they awoke to the 
obvious advantages of manufacturing for themselves. 
Production was not indeed a complete novelty in th'^ 
history of the movement : and in quite early days we 
find the Co-operatives in possession of a flour-mill. 
But once it was undertaken in real earnest, their 
productive enterprise grew apace. Fruit farms, 
dairies, coal-mines, and even tropical plantations 
were acquired. Factories were started for the manu- 
facture of clothing, boots, soap, saddlery, and 
furniture. Not even transport was neglected, and in 
due course a line of co-operative steamers began to ply 
between English and continental ports. In short, 
the whole process of production, from mine or field 



176 NEW FALLACIES OF MIDAS 

right up to the store counter has been brought step by 
step within the scope of co-operative enterprise. 

In many cases, it is true, actual achievement has 
been small : and some have even written down 
co-operative production as a failure : but at least it 
points the way towards greater things. It has proved 
that the working-class consumer can, by combination, 
dispense with the services of the capitalist and organise 
for himself the supply of his own chief wants. A 
movement so prosperous and ambitious cannot stand 
still : it is already a power in the land to which the 
passage of each year brings fresh addition of strength. 
Recentty it has entered the field of politics : its can- 
didates are preparing to stand at the next parliamentary 
election : and its alliance with the Labour Party itself 
gives a clear indication of its future policy. But, 
wonderful progress as the movement has now made 
in the seventy years of its life, we can scarcely gauge 
its true potentialities except by examining more 
closely its natural scope-jgind limitations — and to these 
we must now pass. 

First, then, of its achievement. To the working 
class consumer threatened by the tyranny of the 
capitalist profiteer, co-operation has proved a veritable 
bulwark of defence. By offering a strong incentive to 
economy and by opening an easy channel for invest- 
ment, it has given him the opportunity (hitherto but 
rare) of controlling in part at least the apparatus of 
production and supply. But it does more than this : 
to combat the forces of Capitalism without, would be 
small gain if the self-same forces were allowed to gain 
a foothold within the societies themselves. This 
however the very form of their constitution effectually 
prevents. When every member is on a footing of 
equality, when one pound invested in the Society's 
funds carries the same authority as a thousand, where 
'* one shareholder, one vote " is the democratic prin- 



SOCIALISM 177 

ciple of co-operative control, it is clear that no single 
shareholder can gain a predominant position over his 
fellows. There can be no magnates of co-operative 
finance. Thus there would seem to be a real truth in 
the societies' claim that they have exorcised within 
themselves the hated spirit of commercialism. Com- 
petition between member and member, or between 
store and store becomes altogether meaningless, when 
" profits " are distributed, not in proportion to each 
member's capital, but in proportion to the purchases 
that each member makes.* Best of all, this beneficent 
change has been accomplished, not (as under socialism) 
by a universal system of compulsion, but by the 
spontaneous act of individual men and women. The 
Co-operative Movement works through no paternal 
discipline of State : rather it is of itself a liberal 
education in economic freedom, an opportunity for the 
personal exercise of economic wisdom, and a stimulus 
to the virtues of independence and self-help. 
' .0 Yet against this special excellence of the co-operative 
scheme must be set its one fundamental weakness. 
For, while, like Socialism, it sets out to solve the great 
economic problem of the day, it cannot, like Socialism, 
pretend to offer a complete solution, simply because it 
can never hope to cover the whole field of economic 
life. That problem it approaches, as we have seen, 
from one side only, the side of the working-class 
consumer. His conscious and immediate wants it 
attempts to satisfy and may succeed in satisfying : 
but with production other than that which satisfies 
those needs, it is not interested. When, hovv?ever, we 
come to consider our own national industries, it will 
at once be seen that they are by no means confined to 
this narrow field. Our workshops and factories are 
engaged in turning out cantilever bridges and trans- 

* Invested capital receives, it is true, a regular dividend ; but this 
at no more than a standard rate of four or five per cent. 



178 NEW FALLACIES OF MIDAS 

atlantic liners as well as handkerchiefs and tea-pots. 
An enormous quantity of our out-put is destined for 
exportation : much of it consists of articles which are 
of no use whatever to the poor. Co-operative societies 
could not well undertake to supply the Admiralty with 
coal : they could hardly engage upon a contract for 
building a railway in Peru. Hence it seems clear 
that they can never capture many of our largest and 
most prosperous industries. Let us admit that one 
day the class from which their members are drawn 
may to a large extent become economically self-con- 
tained : that is to say, the large number of the popu- 
lation may stand, as it were, apart producing by them- 
selves and for themselves the chief necessities of life, 
consuming the products of co-operative farms, wearing 
clothes woven on co-operative looms, and using articles 
of furniture produced in co-operative shops. But 
there the natural function of the Societies must cease. 
They cannot oust the private capitalist from his control 
of other industries. Working side by side with him, 
and often in competition with him, they may indeed 
hold their own and serve their appointed end : but 
the main economic fabric of society will not be radically 
changed, because a part of it is organised on a popular 
basis and pays dividends in a peculiar fashion. The 
societies will remain, as Lord Rosebery said of them, a 
State within the State, a co-operative island in a 
Capitalist sea.* 

Before, however, even such limited success can be 
attained, the problems and difhculties which must be- 
faced and overcome are numerous enough. Two in parti- 
cular seem to call for mention here : and both concern 
co-operation upon its productive side. The first has 

* In the report of the Fabian Research Committee it is estimated that, 
given the widest possible extension of co-operative business, it might 
eventually cover one-fifth but no more than one-fifth of the total 
national production. 



SOCIALISM 179 

to do with its relation to the rival agents of production ; 
for with these, until they have established a monopoly, 
the societies must in very self-defence compete. 
Now as, we have seen, they are not primarily money- 
making concerns : and for this reason they lack the 
incentive which stimulates the energy and imagination 
of the private capitalist or trader. He, for his part, 
is ever on the alert to find a new market for his goods, 
and to adapt his production to some change of taste 
and fashion. In other words, he tries to create 
demand ; the co-operatives follow it. His object is 
to discover fresh needs : theirs to supply the needs they 
see. Hence co-operative production is apt to be too 
cautious and conservative. The very security of its 
market is a discouragement to bold initiative : and 
so there is a real danger that co-operative industry will 
lag behind, content to employ old-fashioned easy- 
going methods, and to supply goods inferior in quality 
to the goods of its capitalist rivals. If that prove 
to be the case, success will be long in coming : perhaps 
will never come at all, and the first problem therefore 
is briefly this : can the standard of co-operative 
production be kept high, and at the same time the 
standard of co-operative ideals not be lowered, or 
must the bare fact of external competition involve some 
concession to the spirit of commercialism ? 

The second problem springs in part from the first : 
for closely connected with their relation to competitors 
is the Societies' relation to their own employees. 
Amongst the many methods whereby the private 
capitahst is enabled to over-reach or outstrip his 
rivals, not the least fruitful is the employment of 
cheap labour : and it is clear that if by paying low 
wages he can produce his goods at a lower price than 
the co-operatives, they will once again be placed in a 
dilemma. They can hardly hope to extend their 
market, so long as their goods are dear in comparison 



i8o NEW FALLACIES OF MIDAS 

with his : yet the democratic principles for which they 
stand forbid that they should offer to others a wage 
which would not satisfy themselves. This problem is 
one which admits of no evasion : for with the increasing 
growth of co-operative production it is likely to become 
more acute, not less. Hitherto, it is true, the difficulty 
has been tided over. Employing though they do some 
hundred thousand hands, the Societies have never- 
theless been able to give them generous treatment ; 
and the wages they offer compare favourably with the 
wages paid by their capitalist rivals. On the other 
hand we must remember that the great majority of 
their employees are women and girls, who have as yet 
developed no strong organisation of defence nor 
corporate feeling of injustice : and we may be sure 
that as the industrial enterprise of the societies expands, 
it will less easy for them to satisfy the claims of their 
employees than it has been in the past. At a time 
when the workers are demanding a larger and larger 
share in the profits of production, it is unlikely that 
they will make any exception in the co-operatives' 
favour. If their demand on capital is just, it matters 
little to whom that capital belongs : and whatever 
is extorted from the private capitalist, will be required 
of co-operative capital also. 

This question is, of course, no new one and it has 
long exercised the minds of the co-operatives them- 
selves. Their former coolness towards the Trades 
Unions arose mainly from this cause. They have even 
experienced strikes and labour troubles in their own 
factories and shops : and even with the Trades Unions 
as their allies the question can hardly as yet be con- 
sidered closed. Various expedients have been devised 
to meet it. The plan of admitting the employees to 
some share of the control has been considered only to 
be rejected. The Scottish societies have tried to solve 
the difficulty by admitting them to a participation of 



SOCIALISM i8i 

the profits. But such a concession is not merely at 
variance with the co-operative view of profits, but is 
also open to just the same objections as when it is 
made by the capitalist employer. The fact is that so 
far from solving the problem of industrial profits, 
Co-operation has merely carried it one step further 
back. When the issue ceases to lie between master 
and man, it is revived again between producer and 
consumer. Between the interests of these two, there 
must be conflict, so long as there is also division of 
labour or a system of exchange. It is the fundamental 
antagonism of economic life : and reconciliation can 
come in two ways and two ways only. One is by the 
adoption of State Socialism, that is, by force. The 
other is by a voluntary and universal recognition of 
the economic brotherhood of man. 

Now it is for the latter ideal that Co-operation above 
all stands : and in its loyalty thereto must lie its 
ultimate chances of success. For while it can never 
hope to conquer capitalism by capitalist methods, it 
may yet win the world by converting it. The two 
problems of which we have spoken, will be solved, if 
they are to be solved at all, by maintaining co-operative 
idealism, not by debasing it. The solution of the first 
must come by offering the best possible value to the 
purchaser of goods ; the solution of the second by 
offering the fairest possible wage to the employee. 
In preferring fair prices before large profits, in setting 
commercial honesty above the capture of markets, in 
upholding standards of good workmanship, and in 
rejecting all that is shoddy and unsound, the 
Co-operative societies may set a pattern to the world ; 
and notwithstanding that progress may be slow, it 
will none the less be sure : for such methods bring their 
own reward. So too, by resolutely insisting on an 
equitable wage-scale, without undue regard for profits 
on the one hand, or undue leniency to the workers on 



i82 NEW FALLACIES OF MIDAS 

the other, they may do much to settle the old quarrel 
between employers and employed. For they will 
teach a practical lesson to both parties : it will become 
clear to the employer that what the Co-operatives can 
afford to pay, must also be possible for him : and from 
the Co-operatives' experience the employed will learn 
what wages are possible and what are not. Finally 
and above all, there is much virtue even in a name. 
So long as competition was the catchword of the day, 
it is little wonder that men even thought it a duty to 
outbid or undersell a rival. But once the idea is 
spread abroad, that co-operation can succeed where 
competition has failed, then surely we may hope to 
see the jealousies, suspicions and injustices of the past 
yield place to a new and generous spirit of good fellow- 
fellowship and trust. 



Chapter XIV 
FALSE SOCIALISM OR THE SERVILE STATE 

(i.) 

It is the one great merit of the Socialistic method that 
it is constitutional. For though its end is revolu- 
tionary, the means to that end are not. Socialism 
does not run counter to the principles of democracy ; 
it does not seek to flout the supreme authority of the 
State but rather to reinforce it. Its battles will be 
fought out, not at the barricades, but across the benches 
of the House of Commons. In other words, socialism 
could only be established by the express will of the 
people and through the votes of its elected leaders. 
Yet just because the socialist movement is a political 
movement, pursuing its aims through constitutional 
courses, it is for this very reason exposed to a peculiar 
danger. Democracy is a sea of shifting tides and many 
incalculable currents, and the strong flow of the people's 
will may often be stemmed, or, if not stemmed, diverted 
into unexpected channels. Parliament's policy is 
influenced by much else besides the ballot-box. All 
manner of interests are reflected in its changing counsels 
and of these interests Labour is by no means the 
strongest or most united ; still less is it the most skilful 
or experienced in the game of political tactics. So the 
very methods by which Labour feels its way towards the 
socialistic system, may be used by others to thwart 
its purpose and render its seeming victories innocuous. 
If, as we often boast, England is in truth a democratic 
country, there was never surely a democracy in which 

iS3 18 



i84 NEW FALLACIES OF MIDAS 

the authority of wealth and privilege were allowed to 
survive so long, so openly or so effectually. After two 
Reform Bills, the introduction of the secret ballot, and 
the diminished power of the House of Peers, the country 
has continued to accept the rule of a '' governing 
class." Two thirds at least of its parliamentary 
representatives are still drawn from the ranks of the 
gentry, men bred in the traditions and prejudices of 
their station, and educated in those twin strongholds 
of aristocratic privilege, the Universities and the 
Public Schools. In the atmosphere of a House thus 
constituted, the Labour Party has struggled almost in 
vain to keep its head clear ; and in the course of time 
has become half assimilated to it. Some of its members 
rose indeed to ofhce ; but even men like John Burns, 
seemed susceptible to the influences of departmental 
tradition ; and before long, many declared that he had 
turned Tory in his old age. So it may fairly be said 
that before the war no authentic spokesman of the 
people had as yet attained to a predominant political 
position. Meanwhile, wealth had rapidly been gaining 
an even stronger purchase upon the reins of power. 
How deep or how far reaching was its influence, only 
the politicians could tell. But the strength of vested 
interests was frequently sufficient to defeat reform ; 
and it was the common complaint of Labour that when 
Government intervened upon industrial disputes, it 
too often ranged itself openly upon the side of the 
employer. The advent of the war bringing as it did 
vast increase of wealth to those who were already rich, 
making them, through the medium of repeated loans 
the giant creditors of the nation, and serving at the 
same time to break up the organised strength of 
the Trades' Unions and to compel the suspension of 
industrial strife — the war, I say, though it has also at 
the same time let loose the flood of revolutionary 
passions, cannot but have added to the power of 



THE SERVILE STATE 185 

wealth. With the coming of peace, the capitalist 
will be found doubly armed against his adversary the 
working-man. Not only can he fight him — as well 
perhaps as ever — upon the old industrial battle-ground ; 
but like a skilful strategist he may strike in another 
quarter, and while yet the ranks of Labour are dis- 
integrated and the reorganisation of industry is taking 
place, he may mobilise even more powerful forces and 
ambush the enemy upon the field of politics. For 
pohtics will play no small part in the re-shaping of 
industry. Already the war has led to the concen- 
tration of immense powers in the hands of our states- 
men and officials. It has brought about the temporary 
nationalisation of mines and railways. It has given 
us a public Ministry of Agriculture and Shipping and 
Food. There is scarcely a department of the national 
life which has been left untouched by State control. 
And the return of peace, so far from loosening the 
bonds, may well serve to draw them tighter. The 
Government which handles the demobilisation of the 
army, will exercise wide powers over the redistribution 
of labour and the new conditions of employment, and 
such an opportunity for central organisation it f could 
not, if it would, refuse. The economic situation will 
not allow of such a course. Food will be scarce and 
famine perhaps perilously near. Raw materials will be 
scarcer and industry sorely crippled by its lengthy 
dislocation. Private capital will be exhausted by the 
exigencies of war finance, and helpless to meet the 
coming struggle for the world's markets. The crisis 
(for it will be no less) will call for measures even more 
autocratic and comprehensive than we have yet 
witnessed ; and for the time being the Cabinet may be 
compelled to take the whole business of production 
and supply under its own control. Here then is the 
Socialist's opportunity ; these sweeping, though 
temporary, expedients surpass his wildest hopes ; 



i86 NEW FALLACIES OF MIDAS 

and he may well see in them a stepping stone to a 
full and permanent execution of his programme. 
Yet while he is rejoicing over the triumph of the 
cause, let him beware lest he shall have played into the 
capitalists' hands and lest his be but a hollow victory 
after all. The lessons of history are plain ; nations 
have before now won comfort and security by bartering 
away their independence ; and into the same fatal 
error, Labour too may easily fall. That in the next 
few years the working-man will obtain manifold con- 
cessions in higher wages, more tolerable conditions 
and better organisation against unemployment, this 
is not to be doubted. But if when he accepts these 
bounties from the State he accepts them upon terms 
which curtail his liberty of action, his freedom of 
contract and his power to fight, then he will have been 
out-manoeuvred ; he will have lost the campaign. 

(ii.) 

For the reforms which seem to lead along the road to 
Socialism,' may in reality lead us unsuspecting to a 
very different goal. That goal is the Servile State. 
The phrase and the political theory which it covers, 
are alike Mr. Belloc's ; the Servile State is in fact the 
peculiar bogey of his own invention. It is defined by 
him as ''a condition of society wherein one class of the 
people is constrained by positive law to labour for the 
advantage of another class. " The mark and sign of 
the Servile State is a legislation which discriminates 
between two classes, the Capitalist class and the Pro- 
letarian class, and which im.poses certain definite 
obligations upon the latter, as proletarian, and because 
it is proletarian, and accepted by them in consideration 
of specific concessions whereby a decent standard of 
comfort and security is guaranteed to them. The 
Servile State is in short a compromise, through which 



THE SERVILE STATE 187 

Labour's title to receive a fair wage, and Capital's 
right to compel work in return, are alike ratified by law. 
Now it is of the nature of all bounties and concessions 
that they should carry with them a corresponding 
obligation on the part of the recipient. If I accept a 
favour from a friend, I am morally bound to do him 
some favour in return. So when the Lady Bountiful 
of fifty years ago provided her tenants with woollen 
goods at Christmas time or soup when they were ill, 
she expected that they on their part should " look 
up " to her, should behave in such and such a manner 
when they met her on the road, and in general should 
recognise their status as inferior beings. All this 
was doubtless very proper and, so long as the obliga- 
tion remained a sentimental and personal concern, 
quite harmless. But when the obligation becomes 
impersonal or absolute and is exalted to the rank of 
a theory, the case is different. To-day charity has 
ceased to be a virtue and has become a science. The 
poor man is no longer an object for benevolence and 
almsgiving ; but for investigation, for supervision, and, 
if need be, for disciplinary treatment. His state of 
necessity is held to give his benefactors the right to 
dictate humiliating terms ; and his submission to 
various inquisitions and restrictions is a primary 
condition of relief. The Charitable Body of to-day very 
naturally insists that no help shall be given to any man 
whose past, present and future conduct does not 
conform to its own standards of right behaviour ; 
nor would there be much harm in this perfectly just 
procedure, were it not that consciously or uncon- 
sciously the benefactors of the poor have been betrayed 
thereby into a fixed and settled habit of mind. They 
come to regard the poor not as ordinary members of the 
community but as a class apart which, being proved 
incapable of ordering its own affairs, is in need of 
external direction and assistance. " If the poor will 



i88 NEW FALLACIES OF MIDAS 

not work," says the charitable body, " they must be 
compelled ; if they will not save, we must make them ; 
if they will not keep their houses clean and healthy, 
we must pass a law to ensure that the kitchen window 
is kept open and the kitchen floor scrubbed out at least 
once in a Week." The benefactor moreover belonging, 
as he usually does, to a class which is capable of ordering 
its own affairs, concerns himself solely with the 
poor. For him the rich are above the law ; and if for 
example some improvident gardener being dismissed 
from my Lady Bountiful' s service, should fail to find 
another post, should get into debt, pay no rent, and be 
driven to apply to charity for aid, the Charitable Body 
will thoroughly investigate his case. The Lady 
Bountiful will be consulted, and if that ugly show of 
temper in which the man indulged can be shown to have 
been an abnormal aberration, something may be done 
to find him fresh employment. The curious coinci- 
dence that my lady has dismissed three gardeners in a 
fortnight does not interest or concern the Charitable 
Body in the least. Their duty in such a case is to 
mind their own business — and the business of the poor. 
In what light the poor themselves regard these well- 
meaning efforts, and whether they accept them with a 
good grace or an ill, does not concern us here. The 
point to be noted is this, that the poor are now held in 
theory to be a separate class, possessing a different 
status and requiring a different treatment from the rest 
of the community. Such a theory, if accepted by the 
poor, may accustom them to a tame submission and to 
the further acceptance of whatever is put upon them. 
But it might even so be regarded as a harmless and 
genial foible of the rich, Were it not that the State itself 
appeared to countenance the theory. For Parliament, 
intent upon improving the conditions of the poor, 
has been not a little influenced by energetic theorists. 
Laws have in fact been passed which not only dis- 



THE SERVILE STATE i8g 

criminate between the classes, but which even appear to 
legitimise the difference of class status. Now there 
are many laws, it is true, which of their very nature 
must apply to some sections of the community and not 
to others ; there must be laws which regulate the acts 
of milkmen (in respect of watering their milk) or of the 
clergy (in respect of the ritual they shall observe). 
But the type of legislation with which we are con- 
cerned, goes differently to Work. It says in effect to the 
citizens, " I recognise that there are among you two 
classes, employers and employed. These two classes 
moreover bear in their life and Work certain mutual 
relations towards each other. These relations I shall 
make it my business to control, regulate and adjust. 
Your business as citizens is to accept the classification 
and to behave accordingly. You who are employers 
shall behave in such and such a manner to those in your 
employ ; I will draw up rules for your direction. You, 
the employed, shall receive a separate code of duties, 
differing from those of your employer, and made to suit 
you because you are employed. It will be greatly to 
your interest to observe them." Now legislation of this 
sort has become of late years increasingly common. 
Let us take an obvious instance, the Act concerning 
Employers' Liability. Under this law the Employer's 
obligation is alone concerned. If any accident or 
damage, whether due to carelessness or misadventure, 
should befall a man Working in his employ, then he, 
the employer, must compensate that workman in such 
a 'manner as the State directs. The workman himself 
has no corresponding duty. Under the Insurance Act 
however, the duties of both parties are defined. The 
employer's duty is to put by a weekly sum for the 
purchase of a Government stamp ; the workman is to do 
the same ; and out of their combined payments, 
together with some addition from the taxes, the work- 
man is provided with drugs and medical advice. In 



igo NEW FALLACIES OF MIDAS 

the case of either law, the State has definitely accepted 
the theory of class status, and has legitimised it by a 
differentiation of class duties. In either case, the 
working man, because he is a working man, is entitled 
to make certain specific claims on his employer. It 
should be noted, however, that though equally engaged 
upon an act of service to another man, a member of the 
employer class, because he is a member of the 
employer class is entitled to make no such claim. 
" If," as Mr. Belloc puts it, *' I contract to write for a 
publisher a complete History of the County of Rutland, 
and, in the pursuit of that task, while examining some 
object of historical interest, fall down a pit, I should not 
be able to recover against the publisher. But, if I 
dress in mean clothes, and the same publisher, deceived, 
gives me a month's work at cleaning out his ornamental 
water, and I am wounded in that occupation by a 
fierce fish, he will be mulcted to my advantage and that 
roundly." Here then, albeit under a new form and 
with a somewhat different bias, is that old familiar 
travesty of social justice, one law for the rich and 
another for the poor. 

But, though at first sight this type of legislation 
appears to proceed from a socialistic bias, and to 
favour the poor at the expense of the rich, it may in 
the last resort produce the very opposite result. For 
the legislator has not yet fully disclosed his hand. 
Having firmly established the principle of such legis- 
lation, having drawn a firm line between the classes, 
and by such baits as he can offer having enticed the 
working class to an acceptance of their status, suppose 
that he should turn to them and say, " It has been my 
habit for some years past to regulate the conditions of 
your labour. I have seen to it that you shall obtain 
adequate redress for whatever injury or damage you 
sustain in the performance of your work. I have also 
thought fit to direct you concerning the duties of your 



THE SERVILE STATE 191 

station ; in return for a trifling though compulsory 
payment, you have received the attendance of my 
doctors. In all this I have required more at the hands 
of your employers than at yours, and they have not 
failed me. It is your turn now, I propose that you 
shall work for the said employers in perpetuity, without 
liberty of contract and at such a wage as I shall here- 
inafter fix. Such an arrangement I need hardly say 
will greatly ease the organisation of our national 
industries and secure our regular out-put of production 
against all vexatious and needless interruption." No 
legislator, of course, would ever put the case in such 
blunt words as these. But it is not difficult to foresee 
how he may proceed to the same end. First, he 
enforces amid the acclamations of the poor, the pay- 
ment of a standard minimum wage ; so far good ; 
if the employers grumble, no matter Next, this will 
very naturally be followed by a general scheme of 
compulsory insurance, whereby a man out of employ- 
ment will find himself supported by the State (largely 
perhaps at the employer's expense). Good also; 
the poor man is now secure against every accident of 
fate. Presently, however, it comes to light that there 
are certain indolent persons who finding the Unem- 
ployment Benefit sufficient for the support of life (for in 
justice to the honest worker it could hardly be less) are 
beginning to show a sad distaste for work, and are 
none too eager in their attempts to find a job. This 
condition of affairs our legislator can scarcely tolerate. 
Wastrels cannot be supported out of the public funds ; 
and there is but one remedy. These men who will not 
work must be compelled.* If they refuse to engage 
themselves to an employer they must be put under 
official supervision, and sent to a Labour Colony or 
whatever it be called. This place of detention will 

♦ To withhold the payinent of the Unemployment Benefit would be 
compulsion of a more' subtle sort, but not differing in principle. 



192 NEW FALLACIES OF MIDAS 

also meet the case of those who from physical weakness 
or deficient intellect may be counted as unemployable j 
that is to say, constitutionally incapable to render such 
amount of service to a master as a master would hold 
to be an adequate return for the wage prescribed by 
law. Our legislator might now pause from his labours. 
Industry is settled upon so firm a basis that nothing 
short of a rebellion of the workers could upset his 
masterly edifice. 

Such, according to Mr. Belloc, are the logical ante- 
cedents of the Servile State. They may proceed from 
the motives of high minded men who are eager to do 
the poor a service. They may even be Welcomed by the 
poor themselves, preferring security of work and a life 
of decent comfort (for such at least the Servile State 
would offer them) rather than the precarious 
advantages of industrial independence. But so 
surely as every favour is balanced by a corresponding 
obligation and every right by a duty, there can never 
be true liberty for those who lean too much upon the 
bounty of the State. Like Esau, they would have 
bartered awa}^ their birthright for a mess of not 
unpalatable pottage. 

(iii.) 

Thus comes the chance for the Capitalist who is hard 
pressed by Socialism, but not beaten, to snatch victory 
from defeat. The very weapons with which Labour 
conies armed against him, he may turn against itself. 
If Labour can initiate legislation, so can he. And 
under the appearance of yielding to the Socialists he 
may induce them to play into his hands. For though 
here and there he must yield a little ground or make 
perhaps even considerable concessions, yet he would 
be repaid ten fold for what he lost. Under the Servile 
State (could he but bring it into being) he would be 



THE SERVILE STATE 193 

no longer a bargain driver haggling and manoeuvring 
with Labour, but master absolute. Instead of a 
rebellious, half tamed company of workers, eager to 
assert their independence, for ever demanding higher 
wages, calling strikes and quarrelling with the discipline 
of the work shops, he Would now command an army 
of docile and contented helots. For whatever 
advantage of treatment or condition the workers 
would have gained, they would none the less be slaves, 
bound by the peculiarity of their status to a life of 
compulsory toil. Nor is *such a conjunction of 
industrial servility and material well-being a mere 
fantasy of the theorist. Even in the civilisations of 
antiquity such a thing Was known. At Athens where 
an aristocracy of free-men owed the ease and culture 
of their prosperous lives to a system of slave-labour, 
the slaves themselves were on the whole well fed, well 
used and tolerably content. The Servile State does not 
of necessity involve a proletariat so degraded as the 
serf labourers pictured by Mr. Wells in " When the 
Sleeper Wakes," a soulless mass of human mechanism 
dispossessed of all privileges and powers, and con- 
demned to toil in a swarming metropolis of engine 
rooms and factories for the benefit of their Olympian 
despots of the upper air. On the contrary, the 
proletariat of the Servile State would find their 
happiness increasing rather than diminished. Accus- 
tomed by the slow degrees to the restrictive influences 
of servile legislation, they w^ould lose their appetite for 
liberty and cease to recognise the change. Intent upon 
the flesh-pots of the present they would forget the lost 
privileges of the past, and would look back perhaps with 
pitying disdain to the unhappy epoch of King George 
the Fifth. For to the outward eye, at least, they 
would hardly be distinguishable from the more 
prosperous among the workers of to-day. 

Such, it would seem, is Mr. Belloc's forecast of our 



194 NEW FALLACIES OF MIDAS 

destiny. For while most Englishmen are slow to 
understand the deep and hidden issues of a struggle, he 
with that keen faculty of discernment which springs 
from his French blood and Latin sympathies, detects 
the shifting breeze in every straw and scents the coming 
change. So he sees much to which other folk are 
blind. For the Servile State does not come with 
observation, but by slow and almost imperceptible 
degrees ; so that until its evolution is completed, men 
might scarcely be aware of its existence. None the 
less, if Mr. Belloc read the signs of the times aright, 
England in 19 14 was surely moving towards this 
fatal end. How we stand now and in what fashion our 
political development has been changed or arrested by 
the accidents of war, it is almost impossible to tell. 
The war has bred among the working population a 
nevN^ and revolutionary spirit, which aspires at most to 
dominate the State, and which claims at the very 
least to arrange the affairs of Labour in Labour's own 
way. The working Trades Unions are now no less 
suspicious of the State officials than they were of the 
employer. Not merely will they resist whatever 
attempts are made to coerce them into submission, but 
they will distrust all political interference, however 
honestly intended, in the reorganisation of industrial 
conditions. And along with their new consciousness 
of power have come new opportunities for exerting it.* 
Owing to the necessities of war practically the whole of 
organised or Trades Union Labour has become the 
servant of the State. Working as they do upon 
production which is essential to the continuation of 
hostilities, they have been in a position to levy a kind of 
blackmail upon the Government and to extort all 
manner of concessions. The income of this section of 

* The following interpretation of contemporary conditions is based 
upon the articles contributed to the Times by a correspondent in 
vSeptember, 191 7. 



THE SERVILE STATE 195 

the community has already increased by upwards of 
two-thirds. Nor have they any intention of relinquish- 
ing what they have already won ; on the contrary their 
demands increase at every step. They now represent 
as it were, a nation within the nation, well organised, 
well paid and still dissatisfied. Over against this 
Labour '' nation " there exists another, about its 
equivalent in numbers, not upon the average, 
possessed of larger incomes, and entirely lacking in its 
sense of unity and power of co-operation. The ranks of 
this other " nation " are composed of various elements, 
the employers (now themselves the servants of the 
State) the professional classes, the working men who 
are not organised, and the independent bourgeoisie. 
These elements are united only in their common loyalty 
to the State, and in a vague determination to preserve 
its authority against the tyrannical claims of the 
revolutionary faction. In other words, the old classi- 
fication of Capital and Labour has ceased for the present 
to exist ; and the struggle lies now no longer between 
the employers and the employed, but between the 
close knit army of organised producers on the one hand 
and this heterogeneous medley of independent citizens 
on the other. Upon the issues of this struggle all hopes 
of an orderly and stable settlement depend. If Labour 
is reasonable, if it acts with restraint, and if it is content 
to trust its Parliamentary spokesmen and attain its 
ends by regular and constitutional methods, then it 
may shape its own destiny and win both security and 
comfort without sacrifice of its industrial liberty. 
If however, it presumes upon its monopoly and presses 
its demands too far, worse still, if it should appeal to 
force, establish mob rule and wrest all control of 
policy from the hands of its recognised leaders, then 
the consequences will be more doubtful and more 
perilous. For, when things have come to such a pass 
there can be no turning back. The strength of the 



196 NEW FALLACIES OF MIDAS 

two " nations " must be put to a decisive test. 
Whether victory will lie with the Individualist section, 
rallying to the support of Government for the preserva- 
tion of the State, or whether it may incline (for the 
time at least) to the forces of revolutionary Labour, 
we cannot tell.* But this much we may safely guess, 
that Labour having forfeited all claim to a liberty 
which it had so abused, could not be received again 
into State except upon most binding and perhaps 
humiliating terms. Defeated, it must submit to such 
conditions as would compel it for the future to the 
proper and orderly performance of its duties. Its old 
privilege of industrial independence would be abro- 
gated ; the strike perhaps forbidden ; the terms and 
conditions of employment regulated by statutory law, 
and if behind the law stood Capital victorious and 
dominant, the sequel would not be in doubt ; we 
should have the Servile State. Nor would it be the 
first time that revolution has been followed by like 
reaction and an excess of liberty has led to its opposite 
extreme. 



* Perhaps it would be more honest to say that we think we can. All 
past experience of English character goes to prove that the revolutionary 
section would stand very little chance of even temporary success. 
It is not merely the Individualist section that would combine against 
it. Organised Labour itself would be utterly opposed to mob-rule 
such as we have seen in Russia. The authorised leaders of the Unions 
would resist anarchy \vith all their power and would even be prepared 
to take office to avert it. For this reason whether as an estimate of the 
present situation or as a forecast of the future, the thesis quoted above 
is probably erroneous. It assumes far too lightly that the Labour 
movement as a whole can be identified with the revolutionary parts of 
it. It may be true perhaps that in some cases its leaders are out of 
touch with the ambitions and ideas of the rank and file who thus get 
out of hand. They are often too old and their opinions out of date. 
But this is in fact due largely to the conservative instincts of the British 
working man, who will not willingly discard a trusted and well-tried 
representative, even when he is no longer a true leader in thought or 
action. But the very same instinct which produces this anomaly, will 
undoubtedly serve to check the more eager and unbalanced spirits who 
seek to take undue advantage of it. 



Chapter XV 
SYNDICALISM OLD AND NEW 

(i) 

But how, if the decision should fall the other way ? 
If Labour were victorious what use would it make of 
victory ? Could the Unions hope to build up the 
industrial and political edifice afresh on the ruins of the 
Capitalist past ? Are they ready to construct as well 
as to destroy ? To these questions Syndicalism 
provides the answer. 

When Syndicalism first emerged into English day- 
light, it came with an air of mystery and an obscure 
rnenace of revolutionary troubles. The respectable 
citizen, puzzled by its unfamiliar name and disturbed 
by the omens of the great railway strike in 1911, 
denounced it vaguely without being well aware what 
manner of thing it was. But fuller knowledge more 
than confirmed his fears. Syndicalism, as he saw it, 
possessed all the worst vices of Socialism, with none of 
its merits. That the control of Industry should pass 
into the keeping of the State, he had considered as 
hazardous, but not as an unthinkable proposition ; 
but that the workers themselves should lay their untried 
hands upon that tremendous power, this seemed to 
strike at the very foundations of social stability ; 
in the respectable citizen's eyes it meant the sure ruin 
of England. But if such doubts and fears were felt 
by the middle classes and even by the more conserva- 
tive among the working men, the go-ahead Unionist 
did not share them. He was already tiring of Socialistic 

197 



igS NEW FALLACIES OF MIDAS 

propaganda, and disheartened by the slow progress of 
Socialistic policy, perhaps more than a little frightened 
too at the practical results of Socialistic legislation. 
He was beginning to realise that by embracing Socialism 
he would effect nothing but a change of masters, and 
that in the long run the little finger of the State might 
well prove thicker than the Capitalist's loins. The 
promise of Syndicalism offered a different and more 
tempting prospect. Once let its claims be carried into 
practice, and he would be beyond denial his own master. 
Give the workers the control of the workshops and they 
would achieve at a bound all the ends for which they 
had recently been fighting (for of late years it had been 
workshop conditions far more than wages which had 
been the point of issue with the masters). Last and 
not least, rid industry once and for ever of the Capitalist 
exploiter, and the whole profits of industry would 
henceforward go direct to the men whose labour had 
produced them. In the face of such proposals, it is 
small wonder that the respectable citizen felt nervous 
and perplexed. 

Syndicalism was first born among the French. To 
that quick-witted high-spirited people, a theory 
approved is no longer a theory but a passion and an 
enthusiasm. So Syndicalism, like the democratic ideal 
of the Revolution, soon became the French working 
man's religion, to be preached and practised with 
fanatical devotion.* Once convinced that Labour's 
only hope lay in the Capitalist's destruction, the 
Syndicalists lost no time in declaring on all property 
and all masters a truceless and perpetual war. It is a 
war in which no concessions can be accepted as 
adequate, no promise considered to be final, in which no 

* It must however be remembered that the organised labour of 
France is numerically weak. The membership of the Unions or 
vSyndicats is little over one million as against four or more in England. 
After all France is still in the main an agricultural country. 



SYNDICALISM OLD AND NEW 199 

weapons may be neglected which might ensure success, 
and no agreement kept when it is better broken. The 
campaign will be long and bitter ; but it will move, 
so Syndicalists declare, to a grand and victorious cHmax, 
in which by some vast revolutionary upheaval the 
powers of Capital will at last be vanquished and over- 
thrown, and Labour emerge the lord and master of its 
own destiny. Then, all rights of ownership will be 
abolished, all property be vested in the great organised 
Unions of productive labour. This step appears to 
them both inevitable and right ; for, inasmuch as the 
eternal and fundamental necessity of life is to produce, 
nothing can in the long run withstand the producer's 
claim to manipulate the world. As for the 'State, the 
Syndicalist will find no further use for this meddlesome 
busy-body, which does but hamper the freedom of 
economic man with its outworn traditions and irre- 
levant side issues. Therefore, lest it should seek to 
interfere with the new born scheme of things, the State 
too, like the master, must be swept away. For 
Syndicalism (in its most violent form at least) rejects 
all ties of race, country or religion. It sees nothing in 
life but the struggle for bread, nothing in history but 
the ebb and flow of markets. It is as though the 
hands and the belly had conspired together to deny 
the existence of the head and heart. 

Frenchmen will die for a theory ; but Englishmen 
have always regarded theories with cautious suspicion. 
Show them that a scheme will work and they may 
perhaps be brought to believe in it, but even so they 
will be slow to put it to the test of practice. Not that 
the English working man is lacking in idealism ; on 
the contrary it is his very idealism that saves him from 
being carried off his feet by a one-sided truth ; it tells 
him that economic man is not the whole man ; it 
tells him that bread and butter is not the sole end of 
life. The claims of nationality are binding on him yet ; 

14 



200 NEW FALLACIES OF MIDAS 

and even before he suffered the stern schooling of 
war, he had, as a rule, more sense than to deny them. 
So Syndicalism of the more fantastic and visionary 
type, which would sweep away national boundaries 
and destroy the authority of religion and of State, can 
never take root deeply here in England. Hot-headed 
enthusiasts may use its more exaggerated doctrines 
to foment disturbance and unrest ; it may suit agitators 
to represent the State as the Capitalist's friend and the 
working man's natural foe ; and for a while perhaps 
the masses may believe them. But the saner apostles 
of English Syndicalism are not deceived by such 
nonsense. They know well enough that the State in a 
democratic country is neither the friend nor the foe of 
the people ; for it is the people itself. So they see 
that Syndicalism too will need the State, and that if it 
seeks to destroy the constitutional fabric it will work 
sheer chaos. Without the mediating and restraining 
influence of centralised authority, the different groups 
of workers would speedily fall to quarrelling. The 
policy of one group would clash with the policy of 
another ; builders would turn against agriculturists 
and transport workers be the enemy of both. 
Divergent interests would drive them into bitter 
antagonism, and the strongest group would make of its 
monopoly an instrument for the tyrannical subjection 
of the rest. Orderly government is a necessary con- 
dition of economic prosperity no less than of political 
security. There must be supreme authority to con- 
sult for the general interest, and execute the general 
will ; and supreme authority is helpless without force 
to back it. If the State did not exist. Syndicalist 
society would be under compulsion to invent it. 

According to our wiser Syndicalists therefore the 
State must be supreme, supreme not only to save the 
producers from suicidal competition, but also to watch 
over the consumer's interest. In other words it must 



SYNDICALISM OLD AND NEW 201 

exercise a general control over production and to this 
end it will need wide powers. First, it must own the 
sources of production. If property is a crime against 
society, there can be no reason under heaven why the 
miners should possess the mines ; nor if they did, could 
anything prevent them from misusing their privilege. 
Half the industries of the country would be wholly at 
their mercy ; and their monopoly would be as dangerous 
and despotic as the power of some great Trust. 
Nationalisation therefore, must be the first condition 
of Syndicalist success. And secondly, the State must 
control the character of the output and its price. 
Obviously it is for the consumer to say both what he 
requires and how much he is prepared to pay for it ; 
and it will be the State's business as the consumer's 
representative (since all its citizens are consumers) 
to meet their wishes and arrange with the producers 
accordingly. Not that the interests of the latter will be 
overlooked. The producers are citizens also ; and the 
State will not demand impossibilities ; nor will it 
seek in regulating prices to rob the workman of his due. 
Payments will correspond with the value of service 
rendered ; in proportion as each Trade gives, in the 
same proportion it will also receive. But the reward of 
production will no longer be dependent on the accidents 
of supply and demand, nor vary with fluctuations of 
the m^arket. Every service will have its settled price ; 
and the wage system as we know it will disappear 
altogether. 

But having settled what goods shall be delivered and 
upon what terms, the State (so they say) must interfere 
no further. In what manner and under what con- 
ditions the goods shall be produced is the producer's 
business and may be left to the producer to control. 
The whole internal economy of industry therefore will 
remain in the hands of the Unions. Each Union, 
extended now to embrace an entire Trade (or even a 



202 NEW FALLACIES OF MIDAS 

group of kindred Trades) will be master in its own 
house. In all matters of detail the members of the 
Union will have their say. They will elect stewards 
and foremen who will be responsible for the discipline 
of the workshop, and they will nominate the managers 
who will undertake the wider duties of supervision and 
control. They will have a deciding vote upon questions 
of promotion or admission or dismissal, as Well as in the 
settlement of working hours, holidays, terms of appren- 
ticeship and conditions of employment generally. 
Over matters of larger policy, where technical know- 
ledge is required, the delegates of the various workshops 
will meet in consultation. These delegates will fix 
the scale of salaries and wages, whereby the profits of 
the business are fairly apportioned to different grades 
of workmen. They will employ the advice of experts 
in the choice of processes and machinery.* and lastly, 
they will act as a connecting link between the Union 
and the State. Thus organised each industry will 
become as it were a miniature republic, administered in 
ways of its own pleasure, and governed by officers of 
its own choice. Authority will be delegated from 
below, and not imposed from above. The producers 
will be the willing servants of the community, but not 
its slaves. In short, the true emancipation of Labour 
will be reached not through the numbing officialdom 
of State control, but through the living democracy of 
the Workshop. 



* The workers have not in the past shown themselves good judges 
of the value of invention. The fear is always present with them lest a 
new machine may set their skill at a discount and throw a proportion 
of them at least out of employment. But the consumer's interest 
does not allow of the retention of old-fashioned and un-economical 
processes. Therefore, as Mr. G. D. Coles suggests, the consumer must 
have a voice here ; and the control of this department of industry might 
profitably be shared by the representatives of the State as well as of the 
Unions. 



SYNDICALISM OLD AND NEW 203 

(ii.) 

Such a scheme, blending as it were both Socialism and 
Syndicalism in one, is far more reasonable and far more 
practicable than the vague propositions of the French. 
It has been formulated and even sketched in detail by 
up-to-date economists, who, harking back to the history 
of the Middle Ages, would give to their great Industrial 
Unions the more familiar and national name of Guilds. 
It is an idle fancy to summon dead ghosts out of the 
past ; and to recall historical precedents will not in 
reality help us much in the solution of modern difh- 
culties. Nevertheless, though the actual mechanism 
of the mediaeval guilds would scarcely fit into the 
framework of contemporary industry, yet there is 
muchfin this theory of Guild Socialism which would 
meet the needs of the working-man of to-day. For his 
present discontent arises from social as much as from 
economic causes. He is cosncious now that, whatever 
his political status may be, he is still in some sense a 
slave. He retains his job or loses it at a master's 
pleasure; submits to the precarious justice of a foreman 
whom a master has appointed to order him about ; 
toils at a task prescribed according to a master's 
methods and under a master's rules, and performed to 
swell withall the profits of a master's purse. Worse 
still, this master is a person he does not know, perhaps 
has never met ; a vague invisible authority which 
controls its workmen, like so many marionettes, from 
behind the scenes. Often this master is not even one 
man, but many, a scattered company of shareholders 
who feel no interest in their employees' welfare and to 
whom their employees can make no direct appeal. 
And for these men he must perform a narrow round 
of exacting duties which offer little scope for indepen- 
dence or ambition. Such a system will not conquer the 
spirit of the more robust ; but the weaker brother is 



204 NEW FALLACIES OF MIDAS 

simply crushed by it ; in working hours he can scarcely 
call his soul his own ; and he feels (as one man himself 
expressed it) " like a rat in a trap." It is not surprising 
therefore that the average working-man regards his 
routine of labour as so much uncongenial drudgery. 
It is a good sign and not a bad sign that he is out of 
patience with his lot ; for his impatience springs from 
an inarticulate desire to find in his day's work some 
fuller realisation of himself, and to control by his own 
will and choice that which is after all the main business, 
and which ought to be the main interest of his life. 
Yet there is no royal road to industrial happiness ; 
and it would be idle to pretend that the path of Guild 
Socialism could all be smooth. Not even Labour would 
find it easy, for example, to serve two masters ; and 
between State and Guild disagreements Would be 
certain to arise. Under any such system of dual 
control, there must be border line questions over which 
debate might lead to friction, friction to antagonism, 
and antagonism to a trial of strength. So, too, between 
the different Guilds there would still be room for 
jealousy and competition ; for even when the motive 
of profit making is done aWay, there remains many a 
possible bone of contention, apprentices to be selected, 
sites of factories to be chosen, machinery to be procured. 
All this Would call for much tact and statesmanlike 
restraint among the chosen leaders of the Guilds ; 
and of this they may easily fail. The history of their 
mediaeval prototypes will hardly prove that such 
corporations must always of necessity possess the 
high disinterested souls which some would picture. 
Nor does the past history of Trades Unionism itself 
offer any sure guarantee of honourable and orderly 
behaviour. There are overmany blots upon that 
record, reminding us of pledges broken, contracts 
cancelled, and leaders' authority defied, of demands too 
often pressed without regard to public interest, or 



SYNDICALISM OLD AND NEW 205 

sense of due proportion, of deliberate fomentation of 
class antagonism, and even of open contempt for all 
ties of nationality and all duties of citizenship. Yet 
does not the cause of all this lie, at bottom, in the long 
standing feud with the employer ? and if the cause were 
removed, may not we hope that a better spirit would 
prevail ? Even now there is a bright side as well as a 
dark to the Trades Union record. The English labourer 
can be generous to a fault, when his own people are 
concerned. He will " doWQ tools " and accept the 
loss quite cheerfully in support of causes which 
(directly at least) are not his own. When fellow 
workers are on strike and starving, he has been known 
to send them food, and the self-imposed restrictions 
upon earnings are proof that in the policy of the Unions 
the interest of the Weaker brethren is not forgotten. 
It will require no doubt many years of education and 
experience before the self-governing workshops can 
achieve complete success ; but where self government 
has already been attempted, the men have proved 
themselves good judges in the choice of officers. And, 
even if at times they have thrown their leaders over, 
they are not the only sinners, politicians have been 
known to do the same. In short, there is reason enough 
for confidence in the future of British Labour ; and it 
is after all a poor compliment to British character if 
the masses must be thought incapable of loyal 
obedience, or unfit to be entrusted with the use of 
power. 

To withhold power from men for fear of its abuse 
is always the argument of the faint heart ; for only by 
the exercise of power can the proper use of it be learnt. 
Nobody can learn to swim who is not allowed to 
enter the water ; and Democracy in industry as in 
politics, must always be in some degree a leap in the 
dark. So one day, — it may be soon or it may be late 
— the reward will be found worth the venture ; for the 



2o6 NEW FALLACIES OF MIDAS 

reward is sure. Towards the formation of human 
character and the promotion of human happiness 
industrial democracy will do more than political 
democracy has ever done. The mere exercise of a 
vote in the choice of officers, the planning and dis- 
cussion of the details of workshop policy would train 
men as nothing else could in true independence of 
judgment and true self -discipline of choice. The more 
too a man is free to govern and direct the circumstances 
under which he works, the greater will be his interest 
and satisfaction in that work. This sense of freedom 
was what gave to the Athenian and mediaeval craftsmen 
their astonishing pride and pleasure in their work. It 
is often supposed, but quite Wrongly so, that the Greeks 
despised all manual toil. \Vhat, in reality, they hated, 
Was to give out their services on hire, in a word, to 
turn themselves into wage-slaves. Free independent 
craftmanship, which left him free to work at his own 
time and in his own way, the Athenian honoured and 
practised with cheerful energy. Now it is true, under 
modern conditions, such complete independence is no 
longer possible. The work of our industries is highly 
organised and demands the strict co-operation of 
trained teams ; its discipline leaves little room for 
individual liberties and whims. But, discipline, where 
it is the discipline of spontaneous choice, is often the 
making of a man. It was a volunteer in Kitchener's 
army who discovered that even military routine gave 
a fresh meaning to life, and tTiat the individuality 
which is lost in a crowd may be found in a battalion. 
Even the monotony of such labour (and in the 
specialised processes of modern industry monotony 
can scarcely be avoided) might be mitigated by a sense 
of freedom ; and, however toilsome a task may be, it 
is often to be redeemed by the spirit in which it is done. 
Work performed in a dull spirit of slavish drudgery can 
never be happy work ; work given in the wiUing spirit 



SYNDICALISM OLD AND NEW 207 

of spontaneous service is its own reward. The 
attitude of mind is more than half the battle ; and 
nothing is more certain than that a system which Works 
(as the present system does) against the grain of human 
nature, cannot endure for ever. So long as the 
employees feel that they are merely profitable tools 
in the employer's hands, there can be no final remedy 
for the prevailing discontent. 

There remains perhaps a doubt, and a reasonable 
doubt, whether industry conducted on Syndicalist 
lines would be so successful or efficient as it is under 
Capitalist control. An autocracy can always accom- 
plish much that democracies are helpless to attempt 
and Kaiserdom is a more powerful instrument of 
rnaterial success than a republic. And it must be the 
same with industry. It will be long for instance 
before the self-governing guild could bring the right 
men into positions of command and still longer before 
it could learn to render them implicit trust and loyal 
obedience. Nor could we expect from these elected 
leaders the enterprise, the initiative, the " push and 
go " which is thought to be the special virtue of the 
independent business magnate. A manager who is 
answerable to a jealous body of constituents cannot 
indulge in hazardous experiments or embark upon far 
reaching schemes on his own responsibility. So we 
cannot but question the power of Syndicalism to 
ensure economic prosperity : nor avoid altogether a 
fear lest it should turn the wheels of progress back. 
Yet to admit or rather to approve this doubt is simply 
to condone the false ideals of the past. It was the 
Manchester School who taught us to place our whole 
trust in individualist enterprise, and to pursue effi- 
ciency at whatever cost. Too often their efficiency 
meant nothing else but self-aggrandisement and their 
boasted enterprise the loss and ruin of other men. 
Much of their energy was directed to unworthy ends, 



2o8 NEW FALLACIES OF MIDAS 

the defeat of a rival firm, the deception of a credulous 
public, or the exploitation of sonie tropical region which 
would have been better and happier if left untouched. 
Their philosophy was the philosophy of the old adage 
that " those should take who have the power and those 
should keep who can," and their economic policy was 
in essence the same as the political creed of the dis- 
credited Jingo. But just as Democracy has now 
repudiated the old methods of diplomacy, and the 
spirit of mutual tolerance and co-operation is, as We 
hope, to supersede the traditional selfishness of nations, 
so the ideals of business also may be changed. The 
morality of the counting house need not perpetuate the 
bankrupt morality of kings ; and the days may yet 
come when the crude gospel of individualism will 
cease to be the unchallenged creed of commerce, and 
when to "make money" and to "get on" are no 
longer considered the sole criterion of success. 
Germany has taught us that efficiency does not of 
necessity mean virtue nor even happiness ; and if we 
believe that through freedom men may come to lead 
more useful arid more worthy lives, then all the mis- 
takes and failures which freedom must bring with it 
need never shake our faith. Democracy may be unable 
to make good one half of all its promises ; it may not 
spread peace and goodwill over the world ; it may not 
bring the best brains to the front ; it may not make 
everybody rich. But this much it can claim beyond all 
denial; that it offers to every individual what no other 
system can, the double opportunity of personal liberty 
and public service ; in which combination is embraced 
the whole duty of man. At any rate we are pledged 
to democracy now, and it is too late to return upon our 
tracks. If in truth we are to distrust the people's 
right to manage their own affairs, then for three years 
We have been fighting on the wrong side. If freedom 
is a mistake and democracy a failure, the Germans 



SYNDICALISM OLD AND NEW 209 

were right after all ; and the allied nations who have 
followed an illusion are of all men the niost miserable. 
Nevertheless, though Syndicalism is in one sense the 
natural and logical development of democratic prin- 
ciples as applied to industry, yet in another sense it 
may be found to violate something to which even the 
rights of the majority are not superior, I mean the 
rights of man. For while it offers much liberty with 
one hand, it takes away more with the other : it 
delivers the weak from the tyranny of the strong only 
to enthrall both strong and weak alike to the tyranny 
of a system. When Syndicalism claims to solve the 
industrial quarrel of modern times by removing the 
privilege of property from individual hands, it is 
destroying a liberty which has been perhaps more 
permanently and deeply rooted in our economic life 
than any other. Such a liberty is open to abuse; and 
abused it certainly has been. The Syndicalist has made 
a protest which must be heard and will be heard in part. 
But like most enthusiasts he overstates his claim ; and 
whatever justice We may acknowledge in his champion- 
ship of the producers' rights, yet when he attacks the 
rights of ownership. We cannot but doubt the wisdom 
and the justice of so violent a departure from a tradition 
which is almost as old as man himself. For in the slow 
growth of ages, there is more than the wit of a few 
enthusiasts or the impatience of a single generation 
can replace ; and an edifice which has taken centuries 
to build may crumble in a night-time, when the 
corner-stone is once removed. 




Chapter XVI 
THE RIGHTS OF THE INDIVIDUAL 

(i.) 

It is perhaps the strangest paradox of human progress 
that as our ** freedom broadens slowly down from 
precedent to precedent, " the circle of our individual 
liberties grows narrow and more narrow. The citizen 
of a modern state knows none of the licence which his 
primitive and savage ancestor enjoyed. If he meets 
his adversary in Fleet Street, he may not beat him on 
the head with his umbrella, or relieve him of his ready 
cash ; he may not even call him names. The shackles 
of law and convention hamper his liberty at every turn ; 
and in every detail of his life ; it is forbidden him to 
sleep out at night in public places, to gamble in the 
railway train, or to shoot his rubbish from Westminster 
Bridge. And every year sees new acts placed upon 
the statute book, fresh regulations added to the bye- 
laws. So the list lengthens ; and we pursue the 
phantom of liberty by augmenting the criminal code. 
Now the passion for order and uniformity is, like most 
things, wholesome enough in moderation ; yet it is 
very dangerous when pressed too far. If I procure the 
passage of a law to restrain my neighbour's actions, 
it is well to remember that I place myself and all other 
citizens under a like restraint, and that in our zeal 
to punish the misuse of freedom in others we are only 
too likely to check the fount of freedom in ourselves. 



THE RIGHTS OF THE INDIVIDUAL 211 

Legislation which is intolerant of all extremes, and 
which makes an undiscriminating attack on every 
divergence from the normal code, is apt to kill just 
where it seeks to cure ; and when the liberties of the 
citizen are protected against all possible infringement, 
it may be found too late that no liberties are remaining 
to protect. There is a telling satire on this type of 
legislation in one of Mr. Chesterton's poems, which 
describes the sufferings inflicted by the tribe of meddle- 
some reformers upon an inoffensive citizen named 
Jones. This Jones possessed a dog, which at first he 
kept chained up in his back-yard ; but in so doing, he 
unwittingly aroused the jealous zeal of the reformers. 
First he was compelled to set the dog at liberty ; then, 
because it barked at motor-cars, to part with it 
altogether. Presently the police stepped in and finding 
his yard inadequately guarded annexed that too. 
Poor Jones was now detected in a new offence ; having 
no yard for exercise (as by statute he was bound to do) 
his health Was sadly undermined : and the medical 
officer declaring that his legs were " atrophied from 
long disuse," must needs amputate them both. Others, 
with still more thorough-going and officious zeal, took 
off his arms, and soon (out of sheer pity for such help- 
lessness) his head. The rights of dog and motorist has 
each in turn been vindicated ; the cause of public 
security and public health had triumphed ; the passion 
for reform was satisfied ; and Jones was left an 
obtruncated corpse. The moral of this grotesque 
allegory is plain. State interference may secure us 
immunity from wrong, but it also deprives us of the 
opportunity for right. To cut off the offending hand 
or foot, is to go maimed through life ; and in the 
anatomy of human character liberties are the means of 
self-expression as the members are the agents of the 
brain. So with every fresh restriction of our liberties, 
it is as though a limb were lost. And the real danger 



212 NEW FALLACIES OF MIDAS 

of Socialistic * legislation is precisely this, that, when the 
State, repressing here, curtailing there, shall have 
shaped the individual to the point of true perfection, 
his virtues will have vanished with his vices, and he 
will be found a thing, like Jones, without human 
character or hunian powers. 

Yet, just because human nature is vicious and unruly^ 
and because without discipline there can be no civilised 
existence, it follows that the State must interfere with 
the relations of its subjects. Such interference however 
may take two forms ; it may seek to limit liberties or 
it may seek to destroy them. When, for example, the 
use of alcohol tempts men to drunkenness, the State 
may either restrict its use by visiting heavy penalties 
upon excess, or alternatively it may prohibit brewing 
and remove the temptation altogether. The Pro- 
hibitionist will favour the one course, because he is 
persuaded that the use of alcohol is Wholly bad ; his 
opponent will favour the other because he holds that 
alcohol is in itself a good, and bad only in its misuse ; 
and upon the right choice between these opposing 
views the wisdom of reform will depend. So when 
human nature goes astray and needs the correction of 
external discipline, this question must precede all 
legislative interference. Have We here to deal with 
something wholly wrong — a canker on human nature 
which We must root out at whatever cost ? or with 
something for which, if rightly used, human nature is 
the better and the richer, and which therefore We must 
if possible, retain ? Now there are some abuses which 
fall beyond any doubt under the first of these two 
heads. If the State sets an absolute veto upon duelling, 
or upon the sale of harmful drugs, there will be no 
apologists to uphold the right to kill, or to maintain 

* Socialistic, whether of the Collectivist type or of the SyndicaHst 
type known as Guild-Socialism : for in the latter , as we have seen, State- 
ownership, and in some degree State-Control, are equally essential. 



THE RIGHTS OF THE INDIVIDUAL 213 

that absinthe drunk in moderation is good for health. 
On the other hand, we are no less agreed that certain 
liberties are fundamentally good ; and these, even 
while we are compelled to limit, we shall endeavour to 
preserve. Such, for example, is the power of a parent 
over his child. We believe the institution of the family 
to be the central tie of human life and the source of 
half our human virtues. Therefore we shall tamper 
with its rights as little as may be. It may be that the 
abuse of parental liberties will compel us to curtail 
them ; we may forbid the father to chastise his son in 
a brutal or even in an unreasonable manner ; we may 
force him (often under circumstances of extreme 
hardship) to send his son to school. But the respon- 
sibility of a parent towards his child will still stand; 
and that this responsibility, however liable to neglect or 
to misuse, should be altogether done away, is for most 
of us unthinkable. It is a permanent and inalienable 
right, which every interference has not weakened ; 
on the contrary, the limitations which we have 
imposed upon that right, have given it a new and richer 
value. The relations between parent and child are, 
in fact, more sincere, more generous and more deep 
to-day than in the old era of parental tyranny. For 
limitation has not supplanted the privilege of family 
life nor destroyed the liberty of love : and just as the 
artist who submits to the constraints and conventions 
of his craft, gains a beauty and a strength which 
unrestricted licence cannot give, so under the discipline 
of law, when rightly framed, ^\ e may find a stronger and 
truer freedom than we yet have known. 

(ii.) 

Remembering, then, that it is easier to mar insti- 
tutions than to make them, let us beware lest under 
the present strong impulse of reform we should be 



214 NEW FALLACIES OF MIDAS 

tempted to destroy where We cannot build, and sweep 
away what we are powerless to replace. Standing as 
we do upon the brink of far-reaching economic changes^ 
we shail do well to take account not of the present only, 
but of the future and the past ; and when rival theorists 
summon us in the name of freedom to reform this 
institution and to make an end of that, it behoves us to 
look closely into human nature, and to enquire what 
are the economic liberties which are fundamental in 
man and robbed of which he could no longer be called 
free. Such liberties, as I think, are two in number ; 
and of these the first is the liberty of bargaining. 
The power to accept an exchange or refuse it, the 
power to offer or withhold at will his property, his 
money and his labour, is the inalienable right of the 
free man. Often, it is true, the State for its own 
reasons may encroach upon that right. It may enforce 
the sale of certain goods at a fixed price ; or it may 
decree the payment of a certain wage in a particular 
industry. Yet these infringements of individual 
liberties are the exception rather than the rule ; and 
even in such cases the State does no more than regulate 
the conditions under which bargains shall be made ; 
the bargain itself is not compulsory. The employer 
need not pay the statutory wage if he prefers to let his 
mills stand idle ; and the grocer who objects to selling 
sugar at the Food Controller's price, is at least free to 
give up his business. But suppose the State were to 
address its subjects thus ; " I no longer say that 
if you choose to perform such and such services for other 
men, you shall perform under such and such conditions ; 
but I say tliat these services have got to be performed ; 
and perform them you shall (and at such conditions 
as I please), whether you choose or not " ; then indeed 
the individual would cease to be a free agent altogether 
and the last semblance of economic liberty \\ould have 
been lost. Such loss of liberty is, in fact, what Labour 



THE RIGHTS OF THE INDIVIDUAL 215 

dreads as it dreads nothing else ; the very fear of it has 
made industrial conscription for the purpose of war 
impossible ; it ^\ recked the scheme of National Service 
from the start ; and it has made the working classes 
bitterly distrustful of every form of State-Control. 
Yet such loss of liberty is none the less the very goal 
to which Labour's own policies must inevitably lead. 
Under Socialism and Guild Socialism alike, the State's 
claim to fix the A\age of the producer must sooner or 
later clash with the producer's liberty to vvithhold his 
labour, whenever the wages do not please him ; and 
when this clash occurs the State will have no choice but 
to employ compulsion or (if it prefers) to abdicate its 
claim. The power of the strike will either remain 
effective, or else it will be suppressed by the authority 
of law ; ana in the latter event the producer will have 
lost his economic freedom. Nor, in the long run, can 
the State hope to banish competition except with the 
same result. There is only one means of making wages 
independent of the law of supply and demand ; and 
that is by depriving the individual of the liberty to 
choose his trade. Let us suppose for instance that the 
State assumes control over sea- transport. The carrying 
trade is an absolute necessity of national existence ; 
the need of export and import is permanent and 
urgent ; and the remuneration therefore is less affected 
than in more speculative trades, by the fluctuations of 
the market. The State then may reasonably assess 
the value of this service to the community and establish 
with justice a permanent standard of remuneration. 
As times goes on however, it may Well happen that 
men will be less and less attracted towards the 
mercantile marine. In comparison with the security 
and comfort of rival occupations, the dangers and 
hardships of a life at sea will appear to them distasteful. 
The flow of recruits will cease ; and the State will 
once more be faced with this ailemma ; either it must 

15 



2i6 NEW FALLACIES OF MIDAS 

tempt them with a higher wage and so admit the 
individual's liberty of bargaining or once again it must 
fall back upon compulsion and revive the press-gang 
in a novel form. There is no third alternative. Either 
the individual is free or he is not free ; and no system 
ever inventea can make the State his economic master 
and yet leave him other than an economic slave. 

The second liberty of the individual, is the liberty to 
save. Not even the State can compel a man to con- 
sume against his will ; and it is clear that, if he con- 
sumes less than he produces he will have a surplus in 
reserve. Unless this is forcibly taken from him, he 
may use it either for investment (that is, he may entrust 
it as a loan to someone else in return for certain pay- 
ments) or while living upon the surplus, he may turn 
his hand to producing something else and enlarge 
his profits in that way. In either case, he will possess 
Capital and reap the advantage of Capital's reward. 
Now, under Socialism and Syndicalism, as we have 
seen, it is proposed that all Capital should be taken out 
of the hands of the individual, and be vested in the 
Unions or the State. In other words, individual 
saving will be replaced by collective saving ; and, just 
as the directors of a company put by a portion of their 
annual profits for the future aevelopment of the 
business, so by the State's or Guild's economy fresh 
additions would be made to the collective capital, in 
which addition the several members would each possess 
some stake. Such a scheme is practicable enough ; 
and here at any rate we need not question its power 
to develop industry wisely and to secure a progressive 
increase of production. But in any case it could 
hardly preclude the individual's right of saving 
privately on his own account. The thrifty man, 
earning a good salary or wage, would still be able to 
put by a handsome surplus for investment ; and 
indeed for the father of a growing family such provision 



THE RIGHTS OF THE INDIVIDUAL 217 

for the future would be a necessity rather than a right* 
Even if the privileges of private capital [were enor- 
mously curtailed, they could not be altogether 
destroyed, except by the sacrifice of the individual's 
freedom ; and, seeing how great is the power of 
capital, how swift to accumulate and to gather 
strength at every stride, we may be sure that nothing 
short of the most arbitrary restrictions could hold the 
capitalist in check. Somewhere there would be found 
a fresh outlet for his enterprise, and therein fresh 
means to profit by his resources. So long as man is 
free to save and free to bargain (as every man of 
character would wish to be) Socalism and even Syndi- 
calism must both prove broken reeds in the reformer's 
hand ; for in each case the time will surely come when 
he must either surrender his doctrine of the State's 
supremacy or else his faith in the liberty of man. 

The truth is that the Collectivist's ideal cannot be 
logically consistent without denying the premises on 
which democracy depends ; for like the IndividuaHst's 
ideal it is based upon a fallacy. To the men of the 
Manchester School the economic unit was the indi- 
vidual man, his duties wholly self-regarding, his 
interests everywhere opposed to the interests cf others, 
and his creed to leave the public good to take care of 
itself and to tolerate no interference from the State. 
To the CoUectivist on the other hand, the economic 
unit is the general will as embodied in the State ; and 
(if his theories are pressed to their conclusion) his State 
would take no more account of the individual than the 
Individualist would take account of the State. The 
community would be everything ; the single citizen 
no better than the slave of its will ; and wherever public 
and private interests clash, the latter would go to the 
wall. Now this view of the CoUectivist is, like the 
other, founded upon an unreal abstraction. The 
individual, independent of his fellows, and unaffected 



2i8 NEW FALLACIES OF MIDAS 

by their needs, is a pure fiction ; the State which uses 
its citizens as mere pawns, is equally an inhuman 
monster. The true economic unit is neither the 
individual nor the State, but the harmony between 
them both. And there is but one way and one way 
only (as our political development has long since taught 
us) whereby true and lasting harmony can be attained. 
It is not through some cut and dried system of arbi- 
trary control, which ignores the individual's liberties 
and moulds him to a mechanical obedience ; it is rather 
through the education of an elastic discipline, which, 
while it punishes the abuse of liberties, yet seeks to 
inculcate their proper use, and which instead of com- 
pelling the slavish acceptance of a dull conformity, 
would awaken the quickening spirit of spontaneous 
service. For while the harmony which depends upon 
compulsion is like the harmony of the beehive or the 
ant-heap, efficient perhaps, but static and unpro- 
gressive ; the harmony of free service is living and 
creative. Nothing but the individual will can be the 
ultimate source of all vitality ; even in the animal 
world it is the rare divergence from the normal type 
that creates a new species ; and among men the 
strongest and wisest lead the way. So it is upon the 
free development of individuals that the vitality and 
progress ot the State must in the last resort depend. 
Though the whole is greater than the parts, yet if the 
parts be rotten, the whole also will surely die. 

(iii.) 

Every sane man values liberty in himself ; he 
deprecates it only in others. To save and withal to 
profit by his saving, is his desire, if not his practice ; 
and even the poorest workman would doubtless turn 
capitalist — if he could. But of this he sees no present 
and indeed no future prospect. Others, whether by 
luck or skill, have drawn the big prizes in the lottery 



THE RIGHTS OF THE INDIVIDUAL 219 

of life ; and he, like the disappointed gambler, rebels 
against his fate and questions even the justice of the 
rules . So it is not strange that he should lend a ready 
ear to the facile remedies of theorists, telling him that 
all the profits should be pooled, the cards re-dealt, and 
the game played out afresh on the lines of a more 
equitable partition. Liberty is all very fine in theory ; 
but it has not suppHed him with food to eat and clothes 
to wear. And though the new system may lack the 
spice of adventure of the old, at least it will pay him 
better. If indeed, Socialism means higher wages, 
greater comfort and less work, its moral disadvantages 
may (so the poor man thinks) be easily discounted. 

Upon one point of plain arithmetic the ideas of the 
Socialist, the Christian and the thief meet in a strange 
conjunction. All three are agreed that to make the 
poor man richer we must make the rich man poorer ; 
and although they are not at one about the means of 
doing it, that is no reason to dispute the accuracy 
of their calculation. No special pleading of the 
Socialist s opponents will alter the obvious fact that 
the poor would benefit handsomely by a redistribution 
of the national wealth. Before the war, at any rate, 
the average income of the working man lay somewhere 
between £60 and £70 a year, and, if by some miracle, 
the national income should be divided up and dis- 
tributed in equal parts among all adult bread- 
winners, then that average would be increased by 
approximately one half. So sweeping a reform however 
is hardly to be contemplated by even the wildest of 
fanatics. The object of the Socialist's attack is not 
so much the man of moderate means, the small 
capitalist, the professional man, the tenant-farmer 
or the well paid artisan ; it is directed rather against 
the super-wealthy, the individuals who possess an 
income of (let us say) £5,000 or over. If their goods 
could be " divided and given to the poor," he would 



220 NEW FALLACIES OF MIDAS 

feel that justice had been done In point of fact, the 
net result of such a deal would be to raise the average 
by some ten pounds a head — an increase of one sixth, 
a welcome windfall it may be, but hardly a signal 
triumph for the Socialist cause. To take an alter- 
native suggestion, let us suppose the transference of 
wealth to follow the line of the Syndicalist programme ; 
in that case the results would be a trifle better for the 
workers. Of the gross profits of industrial out-put it 
has been reckoned that the capitalist's share is 
seventeen per cent., the workers sixty-six, the balance 
going to the salaried staff or to upkeep and repairs. 
If, therefore, the capitalist's share were handed over 
to the workers, it would mean the addition of not one 
sixth, but one quarter to their income. This, too, is 
an addition not to be despised ; and in these figures 
there is enough perhaps to prove that such radical 
reform is indeed one way to make the poor man richer. 
That it is the only Way, however, is patently untrue ; 
that it is even the best or quickest way is very doubtful. 
For it is equally possible that capitalist and workman 
should both grow rich together. Such has in fact 
been the experience of the past. During the nineteenth 
century, the wealth of the nation grew prodigiously, 
and no doubt large fortunes were made by individuals ; 
but it is beyond question that a very large share of that 
increase went to the workers. Whereas the average 
of rich men's incomes (incomes, that is, of £5,000 a year 
and over) was augmented by roughly one third,* 
the income of the adult worker was more than doubled 
between 1801 and 1910 ; and though for such progress 
no special thanks are due to the individual master who 
was seldom a willing party to this rise of wages, never- 
theless some credit must be given to the capitalist 

* It must however in fairness be observed that, the number of 
" rich " men has increased roughly tenfold, whereas the working 
population has only been quadrupled. 



THE RIGHTS OF THE INDIVIDUAL 221 

system as a whole ; for without that system such 
progress would scarcely have been possible at all. It 
was the enterprise, the courage, the foresight and ( if you 
will) the greed of the big manufacturers and merchants 
that gave the needful impetus to trade, initiated 
hazardous experiments, perfected new devices, and 
so brought about that niiraculous increase of produc- 
tion of which the workers are reaping the benefit to-day. 
Did we stand once more on the threshold of the Indus- 
trial Revolution, and see clearly before us all the gain and 
loss of unrestricted competition, wh^ would dare assert 
that any alternative system could produce equally good 
results ? And, looking forward into the future, what 
assurance can we have that, if our policy were to 
be reversed to-morrow, the same rate of progress would 
continue as in the past ? The wise traveller, when he 
sights a pool of water across the desert sands, does not 
empty his flask dry until he has good proof that his 
hopes are based on no illusion ; and before we can 
safely dispense with capitalist control, we too, must 
have definite proof of the efficiency of its successor. 
We must be sure that the collective intelligence and 
purpose of the masses, will be equal to their task. Will 
they, in other words, be able to repeat or even to 
improve upon the capitalist achievement ? Is there 
real reason to predict that a hundred years hence the 
average member of the Socialist community would be 
twice as rich or more than twice as rich as the 
average worker of to-day ? 

Before we can give an answer to these questions and 
decide whether industry under popular control would 
be as effective as under capitalist control, we must, 
I think, consider the problem under three aspects, ; 
first, what will be the effect of this change on the pro- 
duction of wealth, second upon the saving of wealth, 
(that is on capital,) and last, upon the use of wealth when 
it is saved. 



222 NEW FALLACIES OF MIDAS 

(i) It is commonly asserted that with the disappear- 
ance of free competition, the chief incentive to energy 
would have been lost ; and that is tantamount to 
saying that men are incapable of giving their best work 
except for the purely selfish ends of private profit. 
Now it is doubtless true that much of the enterprise by 
which trade and manufacture have been developed, 
has been due to the money-making instincts of 
private individuals. The pioneers of the last century 
were men who both owned and controlled their 
businesses and who therefore profited directly by the 
success of their own management. But since then 
circumstances have somewhat changed ; it is more 
common nowadays to find businesses controlled by 
salaried managers who have only an indirect interest 
in the profits of the concern ; nor is there any good 
reason to suppose that their Work is less efficient than 
the Work of the owner managers or that their policy 
is less progressive. In any case, three quarters of the 
population work upon fixed salaries or wages, nor have 
they ever worked on any other terms ; and it is rating 
human nature unnecessarily low to suppose that the 
men at the top have a different conception of their 
duties from the men at the bottom. Nor, after all, 
will all stimulus to energy and zeal be removed by 
Socialism. In the first place services will be still 
rewarded in proportion to their worth ; and there will 
still be a hierarchy of functions and good work will 
still earn the reward of merited promotion. Secondly, 
we must not forget that good work will always directly 
or indirectly mean the worker's gain, even though that 
gain be shared by others. We have abundant proof 
already that a workman will work better, when he 
knows that the whole shop will profit by his industry, 
and himself along with other members of the shop. 
And, in this respect, Syndicalism possesses one manifest 
advantage over the Socialistic system. Where each 



THE RIGHTS OF THE INDIVIDUAL 223 

individual is the servant of the State, we may hope 
indeed that he will feel the call of patriotic duty and 
put forth his best efforts to benefit the community at 
large. But human imagination is not strong. So 
large a unit as the State is too vague and too elusive 
to appeal to every man. He will never see perhaps the 
tangible results of his endeavours ; his share in the 
general scheme is too minute to excite his ambition or 
his pride. But make the economic unit smaller ; 
share out the profits among the members of a Guild or 
still better of a workshop ; and the case will be very 
different. Then at once a certain esprit de corps will 
be aroused ; the healthy influence of public opinion 
will supply a stimulus which will be felt by managers 
and men alike ; and even the loss of competition will 
not be noticed, if the spirit of co-operation takes its 
place. In short, so far as efficiency and effort are 
concerned, industry might well pass from indi- 
vidualist to syndicate control, and still survive the 
shock. 

(2) Over the second point, however, we are at once 
upon more questionable ground. It is clear that the 
vigorous production of wealth is not alone sufficient for 
progress ; there must also be conservation of wealth, 
or industry will remain at a standstill. Now though 
men may be ready to work their best for the common 
cause, it is much more doubtful whether they will 
be prepared to save for it. Economy of public funds 
has never been an easy or common virtue. From 
the minister who squanders the resources of the State, 
down to the man who wastes the writing-paper at his 
club, it is the same unvarying tale. What is every- 
body's business is the business of no one in particular ; 
and while we are careful of the private penny. We are 
carelessly indifferent of the public pound ; and if proof 
of this were needed, the record of municipal finance is 
enough to show how little the average citizen is 



224 NEW FALLACIES OF MIDAS 

interested in collective economy. To make matters 
worse, thrift is not the natural instinct of our people ; 
they are far from being a saving nation like the French ; 
and we cannot expect them suddenly to develop in the 
management of public funds, a virtue which they do 
not practise in their homes. It is true of course that 
they have little opportunity of thrift ; but when the 
opportunity does occur (as it occurred to many during 
the war) it is not used. Still less is that greatest of 
economies, wise expenditure, properly understood. 
The reason why so many shoddy tenements are built 
at the present day, is partly at least because the 
working man prefers the advantages of cheapness to 
the superior comforts of a well-constructed home ; 
and if, after the war, our suburbs are filled with rows 
and rows of ugly unsubstantial houses, it will not be 
because the Board of Trade is lacking in ideals, but 
because Labour sets so little value upon either per- 
manence or beauty that it will grudge to add one 
unnecessary sixpence to the rent. Again, the wisest 
investment that a man can ever make is the sound 
education of his children, yet if the law permitted it, how 
many parents would gladly cut the years of schooling 
short for the sake of some trifling addition to the 
family's Weekly income. In short, it is not at all easy 
to believe that there exists among the majority 
of men sufficient self-restraint or commonsense to 
ensure a progressive increase of our industrial 
resources, should the control of industry ever pass 
into their hands. When the annual budget was sub- 
mitted to their decision, high wages would be more 
popular than wise retrenchment ; the promise of 
speedy returns would catch more votes than the slower 
programme of improved production, and in the 
financial schemes of a democracy there Would be 
little of the deliberate patience and farsighted cal- 
culations of the independent capitalist. It seems 



THE RIGHTS OF THE INDIVIDUAL 225 

moreover that from the very circumstances of the 
case their temptations to extravagant expenditure 
will in a sense be greater than are his. The private 
individual who receives an income of a hundred 
thousand pounds, can hardly spend the whole. It is 
almost a foregone conclusion that three quarters of it 
will at the very least be saved, and so will serve in its 
turn to capitalise fresh output, by which We must 
remember others will benefit as well as he. So the 
great financier acts, as it Were, as the repository of the 
nation's wealth, or at least as a brake upon the national 
expenditure. If; on the other hand, that hundred 
thousand pounds were distributed among a hundred 
thousajid persons, the result would probably be very 
different ; for the temptation of spending it Would be 
increased a hundred thousand fold. Wealth may be 
likened to water which, if gathered in a lake or hollow 
can be saved for further uses, but which, if it descends 
upon the ground in innumerable rain drops, is rapidly 
absorbed and drained away. It may indeed be argued 
that as rain is necessary to feed the ground and fertilise 
the crops, so in the same manner, increased con- 
sumption may raise the standard of living, stimulate 
the people's energies, give an impetus to trade, and 
thus in the end bear fruit in an increased production. 
But the central reservoir is also needed, that is if we 
are to improve on nature and irrigate our lands. So 
the capitalist too may have his function ; he too may 
be necessary to the proper improvement and develop- 
ment of our national resources. And if we were once 
to break the dam which holds these gathered Waters, 
can We be sure of the result ? No doubt a temporary 
relief would be felt in the parched and sterile places ; 
may be the immediate harvest Would be the richest ever 
known. But who can say whether in the uncertain 
future, the scattered waters could ever be regathered 
or the broken dam rebuilt ? It seems more than 



226 NEW FALLACIES OF MIDAS 

doubtful whether now or for many years to come 
democracy could be trusted to regulate its own con- 
sumption wisely or build up its own capital with a sure 
and steady growth ; and without a steady growth of 
capital there can most certainly be no permanent 
advance towards the goal of material happiness. 

(3) There is a third factor which must play an 
important part in industrial progress ; I mean the 
use and investment of capital, and how this would fare 
under a system of popular control falls next to be 
considered. Now there are many qualities which go 
to make the good financier; not the least perhaps is 
courage. He must be ready to sink his money in some 
new scheme of which he cannot foresee the certain issue 
except with the eye of faith ; he must be ready to take 
risks ; and something of the eager instinct for adventure 
is needed in his composition. However when We come 
to ask how far we might count upon the same qualities 
of enterprise and courage in the policy of the Socialistic 
state or Syndicalist society, it may seem at first 
sight as though they will not be needed. By the very 
act of pooling our resources, we should to some extent 
eliminate the element of risk. The losses of an 
unsuccessful venture would be so widely spread that 
they would scarcely be felt by the individual member 
of the community ; and it may be thought that the 
State could embark light-heartedly upon schemes from 
which the most daring capitalist would shrink. Yet 
after all, can We be certain that it would ? Grown 
citizens do not gamble for ha'pence. It is only the 
investor who is out to get exceptional returns, that is 
willing to take exceptional risks. And we must 
remember that under the collectivist system this 
particular incentive will be gone ; there could be no 
more playing for high stakes. For, if the individual's 
share of risk is diminished, it is clear that his share of 
profit will be diminished also ; and a speculation which 



THE RIGHTS OF THE INDIVIDUAL 227 

appeals to the adventurous when it offers the prospect 
of a twenty per cent, return, must seem less tempting 
when it means no more than the difference between four 
per cent, and five. The instinct for adventure would 
hardly be encouraged by the Socialistic state; least of 
all is it likely to be found in the salaried officials who 
will for the most part direct financial policies. For as 
We have seen above, the official is not like the capitalist 
his own master. He has none of the capitalist's 
inducement to adventure. He will not make any 
personal profit out of a speculative deal, and he dreads 
the odium of possible failure more than he values the 
applause of possible success. Neither is he likely to 
initiate nor is the jealous body that controls him likely 
to approve any sudden or bold departures from the 
beaten track. Democracies are naturally suspicious 
of their servants, quick to visit punishment upon those 
who blunder, slow to encourage originality and 
imagination ; and if the industrial pioneer is to have 
free rein for his genius he must be hampered neither 
by the red tape of officialdom nor by the burden of 
responsibility to others. This is not indeed to say that 
the spirit of adventure will be equally needed in every 
branch of industry or in every department of com- 
merce. There are some kinds of production which 
involve little element of risk. When the demand for 
a thing is constant, and the supply of it regular and 
secure, the producer's task is straight-forward enough ; 
there is little call for startling innovations. The 
transport service is a case in point. We can calculate 
precisely what train-service will be needed in the 
various parts of the country ; and no special enterprise 
is wanted to supply those needs. Competition in 
supplying them will in the long run be extravagant and 
costly ; and a public system of control (if placed in 
reasonably skilful and energetic hands) would mean 
better organisation and substantial economies. There 



228 NEW FALLACIES OF MIDAS 

is therefore much to be said for the nationalisation of 
these natural monopolies, in which demand and supply 
are as constant and invariable factors as in the case of 
light or water. 

Where, on the other hand, a considerable element of 
risk is attached either to the demand or the supply, 
State control will not so easily discharge the part which 
is now played by private competition. The exploita- 
tion of an oil well, for example, is in a large degree 
speculative ; the probable yield is uncertain ; the 
cost of production is uncertain also ; and nothing but 
the equally uncertain chance of big returns may induce 
men to make the venture. Again, the requirements of 
the consumer are changeable and by no means easy 
to predict. The manufacturer cannot estimate in 
advance the value of some novel luxury or some new 
invention. It may take the public fancy ; or it may 
prove a complete fiasco. Often the demand for a thing 
is not felt at all, until the supply is there to create it. 
Even our military chiefs had not conceived of half the 
uses of the aeroplane until the enterprise of private 
inventors had revealed its possibilities, and just as it 
required the strong stimulus of war to arouse in them 
the spirit of invention, so without the stimulus of 
competition there Would be little to disturb the con- 
servative habits of the producer or to break him from 
his settled methods of production. Competition is 
after all the sovereign remedy against stagnation, and 
so whereas the Socialist official falling complacently 
into the groove of dull routine, would be content to 
supply the obvious needs of the consumer and no more, 
the competitive trader, eagerly intent upon new profits 
may lead and educate the public taste by tentative 
experiments and bold improvisations. In short, it is 
by the imagination and enterprise of the few rather 
than by the conscious demand of the many that fresh 
conveniences are added to our life land civilisation 



THE RIGHTS OF THE INDIVIDUAL 229 

forges patiently ahead. Were we forced to wait for 
innovations and improvements until the general public 
is aware that they are wanted, we might very well 
wait till Doomsday ; but. if we allow the capitalist 
his chance and give him a fair iield for bold initiative 
and reasonable profit then all the wealth of human 
ingenuity will be at our disposal and we shall not be 
kept waiting long. 

We have now considered under three different aspects 
the fitness or ability of the people to undertake the 
control of industry and to fulfil the function of the 
dispossessed capitalist. Of its very nature, all fore- 
cast of the future must be guess-work ; but so far 
as past experience can prove anything, it seems that 
upon two of those counts at least the people would be 
found wanting. Under the Socialistic State we may 
hope (though we cannot be certain) that a sense of 
duty and loyalty to the common cause would supply 
the stimulus to energy and zeal which is now supplied 
by private profit ; but for that difficult combination 
of audacity and self-restraint which has been the 
mainspring of our past industrial progress, we have 
found no substitute. These are qualities which 
legislation and organisation alone are powerless to 
produce. It requires a particular environment of 
economic conditions to bring them out, just as much 
as it requires a particular environment of physical 
conditions to develop the craftiness of the tiger or the 
docility of the cow. Education may do something ; 
but education of the class-room is not in itself enough. 
It is only in the hard school of life that these lessons can 
be learnt. True thrift is taught not by compulsory 
economy ; but by the painful discipline of personal 
experience. A man begins to value the importance of 
doing right, only when he has seen or tasted the con- 
sequences of doing wrong. Indi\idual virtues are the 
outcome of individual responsibility ; and however 



230 NEW FALLACIES OF MIDAS 

comfortable and secure the socialistic life might be, 
we know that responsibility is not to be learnt by a 
servile dependence on the State. 

For picture what kind of life strict Socialism would 
offer. From the beginning to the end of a man's 
career his path will be made easy and secure. Employ- 
ment will be certain ; and (if Socialism can make 
good its claim) a decent standard of remuneration 
will be certain also. He will not need to make pro- 
vision against accident or sickness ; the State will 
see to that. He will not need to put by against old 
age ; a pension will be assured to him. He will not 
need to start his son in life ; the public service will 
claim them as it has claimed himself, and will allocate 
them to their proper stations. There will be no 
demands upon his charity ; for the sick and needy 
will have passed under the protection of the State. 
In a hundred ways the chances and accidents of life 
will be automatically countered ; and this not by his 
own forethought and discretion, but by a paternal 
authority, which will shelter him even from the con- 
sequences of his own weakness and mistakes. I do not 
say that such a life will not be happy and comfortable 
and contented ; but I do say that it will be no natural 
or effective training ground for the virtues of self- 
reliance and self-control. The normal responsibilities 
of man will be lacking in it ; for responsibility means 
liberty, liberty to do wrong as well as to do right, to 
fail as well as to succeed. No doubt such liberty is 
dangerous both to a man's own self and to his neigh- 
bours ; but liberty is always dangerous ; in religion, 
in marriage, in all the best things of life, the man, who 
is free to choose, runs recklessly into risks which should 
appal him, and before which he might well hesitate to 
trust his own liberty of choice. Yet he would be less 
than a man who on that account would shrink from the 
responsibility of choosing. For it is by accepting 



THE RIGHTS OF THE INDIVIDUAL 231 

risks that character is made. The man who goes on 
guiding strings through life, will surely be found 
wanting when the big test comes, and he must stand 
perhaps alone. The Spartan, well drilled and moulded 
as he was in the iron discipline of Lycurgus, often broke 
out into licence and debauch when he found himself 
abroad and beyond the reach of the State's controlling 
hand. From the behaviour of Germans in our own 
day the same moral may be drawn. There is no easy 
road to Virtue ; and if the State attempts to man-" 
facture what can only come by natural growth, it will 
one day find that the law-made virtues on which it 
counted have failed it at its need. 

(iv.) 

If, then, this analysis be true, Socialism stands 
doubly condemned. Whether regarded as a moral 
education or solely as a business proposition, it is alike 
found wanting. It removes the natural incentive 
to enterprise and thrift ; and yet puts nothing in its 
place. It destroys the economic liberty of the 
individual ; and yet offers no security of progress to 
the community as a whole. If we were sure that by 
forfeiting our freedom to save and bargain we should 
indeed bring the millenium nearer, the sacrifice might 
perhaps be worth our while. But if Socialism, while 
bringing us a temporary advantage, were to end in 
ultimate stagnation, then we should repent at leisure 
of our premature impatience ; for, like the Arab who 
has killed his camel to extract the water from its carcase, 
we should find ourselves satisfied indeed for the instant, 
but no longer capable of travelling to our journey's end. 
And is it in truth so very strange if this instinct for 
economic liberty should prove after all to be the basis 
of material progress ? Even the abstract laws of 
conscience and religion have also their utilitarian 

18 



232 NEW FALLACIES OF MIDAS 

application. There is a sound hygienic principle 
underlying the observance of a weekly sabbath ; honesty 
is a paying policy as well as a moral duty ; and with 
the acceptance of the Christian code of ethics life has 
become more tolerable, not less. So if the normal 
human being feels (as beyond doubt he does) a genuine 
desire to be master of his economic fate, not that he 
may use his freedom to the detriment of others, but 
that through his freedom he may realise his own 
ambitions, shape his own course through life, and find 
for himself the road to happiness, then we may be sure 
that this instinct is a sound and even a necessary 
impulse, and that obedience to its call will tend no less 
to his material welfare than to his moral good. Even 
were it otherwise, and if it were necessary to make a 
choice between the two, we cannot in reason doubt 
what our choice would be. The individual character 
is of more account than the prosperity of nations ; 
and to gain all that the world can offer of comfort and 
security is no sufficient compensation for the loss of 
what ennobles man. If the truest ideal of individual 
life is the sacrifice of self, yet that sacrifice to be sacrifice 
at all, must spring from the individual's own free will. 
Human nature can only rise to its full height, when 
a man accepts this responsibility of freedom and uses 
it humbly in the service of his fellows. To refuse that 
responsibility is to shrink from the challenge of life, 
and to leave human nature stunted and curtailed, 
and the greater the responsibility accepted, by so much 
the more will the reward be great. At the entrance of 
the Needle's Eye, there is more virtue in the humility 
of the kneeling camel than in the erect posture of some 
lesser beast. 



THE RIGHTS OF THE INDIVIDUAL 233 

NOTE ON THE RATE OF INCREASE OF 
AVERAGE INCOMES UNDER THE CAPITALIST 

SYSTEM. 

Some striking figures have been compiled by Mr. 
Mailock, which give us the opportunity of testing the 
true value and effect of redistribution upon socialist 
lines. 

Mr. Mallock takes first an estimate of the ideul 
average of income per head, supposing the total 
wealth of the country to be equally divided. Next he 
takes the average income per head actually enjoyed 
by the poor (the class that is supported upon wages of 
£160 per year and under). 

Putting the two estimates side by side, Mr. 
Mallock arrives at the following result. 

A B 

Average income, if the Average income of 

nation's wealth were individuals supported on less 
equally divided. than £i6o per annum. 

180I £20 -^ __^ £14 

1850 £24 ___^> £17 

1880 £35 -~- mr:^ £^4 

1 910 £45 ^ £34 

Thus it will be seen that the '' ideal income " which 
a complete redistribution of wealth would offer, is 
reached by even the poorer class in a period varying 
from thirty to forty years. If Socialism failed to ensure 
a continuation of this normal rate of progress, the poor 
man would actually be a loser, not a gainer by the 
deal. In the future moreover we may expect with 
reasonable confidence a considerable acceleration of 
this rate of progress. It would not be at all surprising 
if, all going well and the population remaining station- 
ary, the average income were doubled in the next 
thirty years. 



Chapter XVII 
COMPROMISE 

If we conclude (as I think we must) that the old 
economic order will survive the shock of the Socialist's 
attack, and if much of the world's capital continues in 
the future, as in the past, to rest in private hands, it 
does not follow that the capitalist's supremacy will 
remain altogether unimpaired. One way or another 
there are sure to be limitations of his power. Taxation 
for instance will certainly divert a larger proportion of 
his income into the public purse. His privilege 
(already much curtailed) of handing down his wealth 
intact to whomsoever he pleases, will probably be 
curtailed still further. But, if the capitalist is wise, 
the chief limitations of his power will be voluntarily 
accepted and self-imposed. Such saciifice (if made 
in the right spirit) will be an act of social justice and 
good citizenship rather than the grudging concessions 
of a threatened despot. If the workers claim a share 
in the responsibilities and profits of industry the 
capitalist will acquiesce not so much because he fears 
the consequences of refusal, but because he recognises 
the justice of their claim. His chcice, in short, will 
be determined not by necessity, but by reason. Nor 
need We doubt that the worker upon his part will be 
ready to listen to reason also. For at bottom the 
normal British working-man is as reasonable as any- 

234 



COMPROMISE 235 

body else. He has a large fund of instincti\ e common- 
sense ; intensely conservative in his habits, seldom 
for long the dupe of passion or illusion, and possessing 
a shrewd grasp of practical issues, he has no great liking 
for political chimeras. His speech, it is true, often 
belies his instincts ; for, though his grievances are 
real enough, he is a poor hand at expressing them in 
words ; and if he often takes a grim pleasure in the 
over-statement of his wrongs, and in applauding .the 
exaggerated claims of revolutionary enthusiasts, that 
is a common failing of mob psychology. His true 
grievance is simply this ; that he is not treated as a 
responsible being. Given a job to do, he is not con- 
sulted how it should be done ; asked to work overtime 
or to make a special effort, he gets no thanks ; and if 
he does his work well and thereby improves or 
accelerates the output, he does not touch a penny of 
the extra profit. In a word, he is used as a tool or a 
thing, and not as a man with a will and a soul of his 
own. And all the while he knows that business might 
be conducted upon different lines ; he knows that, 
were he given responsibility he could justify the trust. 
He knows that industry might be again what once it 
was, a partnership between the master and the man. 
If then he thought that the capitalist were willing to 
acknowledge that partnership, we should hear no more 
talk of sweeping the capitalist away. For the working 
man knows well enough that the capitalist understands 
the management of industry and that he himself does 
not. And to the capitalist he will readily leave it if 
the capitalist will allow to him| also his due share of 
responsibility and trust. For there is one special 
part of industry which every working man does 
understand, and that is his own part ; and if over that 
part at least he were given a limited control, he would 
perform it well content. For while his reason tells him 
that brains and hands have each their separate function. 



236 NEW FALLACIES OF MIDAS 

it also tells him that neither has the right to tyrannise 
over the other. If both parties are reasonable, com- 
promise can never be far off, for compromise is the 
triumph of reason ; and the first step towards industrial 
unity is to understand. More than half the bitterness 
and friction that exists between the men and the 
masters comes from an inability to appreciate each 
other's point of view. Misunderstandings often arise 
from the most trivial causes. Because an employer 
has not the leisure to mix among his men, because he 
fails to show some sympathy where sympathy is 
needed, perhaps even because he neglects to recognise 
his employees in the street, they are up in arms against 
him and interpret his conduct as churlish indifference. 
The employer in his turn, conscious of the changed 
feeling, but ignorant of its cause, sets all down to 
insubordination and unreasoning discontent ; so 
instead of conciliating he endeavours to repress ; bent 
upon upholding his authority he will not listen to 
reason ; the workers' demands, however, just will be 
denied a hearing ; suspected ringleaders will be dis- 
missed ; and thus the temper on both sides grows 
gradually harder. When, in this tainted atmosphere 
of suspicion and distrust, more serious disputes and 
differences arise, the natural consequences will follow ; 
immoderate claims on one hand, stubborn opposition 
on the other, and too often, in the issue, charges of 
broken faith on both. So the breach widens and before 
it can be healed, there must be a new spirit and a 
changed temper on both sides. Yet to despair of such 
a change would be to lose faith in the English character. 
There have been bitter feuds and sharp antagonisms 
enough in the history of our national development. 
But the same reasonable spirit which served in the past 
to reconcile the causes of Protestant and Catholic, 
landlord and peasant. Round-head and Royalist, 
Tory and Democrat, has never failed us yet ; nor will 



COMPROMISE 237 

it fail us now ; and even if we seeni to be drifting 
heedlessly towards a critical impasse, that has always 
been the English way ; and it is none the less certain 
that, before it is too late, our traditional genius for 
compromise will awaken and carry us safely through. 

(ii.) 

We have endeavoured hitherto to trace the course of 
the industrial conflict and to understand the issues 
upon which that conflict turns. Can we now foretell 
the probable solution or guess what form the com- 
promise will take ? Such prophecy cannot be easy. 
There are three rival claims to reconcile, the capitalist's, 
the worker's, and the State's ; and the relative strength 
of these three rivals depends upon the chances of an 
uncertain future. From year to year the balance of 
power is shifting ; and the economic forces which 
control it defy strict calculation. Still less can we 
foresee under what circumstances and in what temper 
the disputants will meet to negotiate the peace, we 
cannot tell whether the terms will be dictated by the 
triumph of the strongest or whether the settlement 
will come through mutual concession and forbearance. 
Nevertheless, having regard to the abstract justice of 
the three rival claims, we can at least hazard an outline 
picture of the ideal compromise ; and in such a com- 
promise the theories of Socialist, Individualist and 
Syndicalist alike will each claim some share ; for 
each, as we have seen, contains some measure of the 
truth. The Socialist rightly asserts the paramount 
interest of the community in the regulation of 
supplies ; therefore we shall recognise the State's 
authority to exercise a supervisory control over the 
entire business of production and consumption. The 
Individualist asserts the liberty of every citizen both to 
bargain and to save ; therefore (within the limits which 



238 NEW FALLACIES OF MIDAS 

the State permits) we shall allow to the capitalist 
liberty in the disposition of his savings, and to the 
worker liberty in the use of his bargaining power. The 
Syndicalist asserts the claim of every producer to share 
the responsibilities and profits of production ; there- 
fore we shall allow to capitalists and worker, as joint- 
partners in production, the right to exercise control 
over their separate spheres ; the capitalist over the 
larger policies of industry and trade, the worker over 
the conditions and practical organisation of his work. 
In a word, we must temper service with liberty and 
liberty with service, and unite the several members of 
the economic body in willing co-operation, while 
leaving to each the free performance of their natural 
functions. What will be the sphere of each and what 
the limits of their power, it must be our next business 
to define more closely. 

(i) What then will be the sphere of the State ? 
First, over certain branches of production it will 
exercise absolute control. These are the " natural 
monopolies " above mentioned, in which since demand 
is constant and the supply secure, competition is super- 
fluous and wasteful. Some of them the State controls 
already ; the Postal service, the Telegraph, and in a 
less degree, public health and education. Besides 
these the supply of water, gas and electric light 
is for the most part even now in the hands of the 
community, as represented by local Boards and 
Councils. In the future however. State control will no 
doubt be extended further, over the railways cer- 
tainly, and, as some think, over the mercantile marine. 
Whether the mines, too, will become national property 
is a more controversial question ; the consumer's 
interest seems to demand it ; but on the other hand it 
must be remembered that in the exploitation of mines 
there is a distinct element of financial risk, and for this 
reason private enterprise is likely to be more efficient 



COMPROMISE 239 

and productive.* There will no doubt be other 
industries over which the same controversy vvill be 
waged ; but generally speaking the burden of proof 
will lie with the Socialists ; and unless the advantages 
of State control are definitely established, the Govern- 
ment will do well to leave the industries in private 
hands. This brings us to our second point ; and forces 
us to ask what will be the relation of the State towards 
competitive production, and to what extent will it seek 
to interfere between the Capitalist and the workers. 
The answer plainly is that the State will interfere as 
little as may be. By hypothesis, the individual, be 
he capitalist or worker, will be free to bargain as he 
pleases ; and any habitual interference of the State 
in the matter of prices, wages and profits generally 
would be a fatal encroachment on that liberty. Where 
however the liberty is used (as it may be used) in a 
manner which is clearly detrimental to the public 
interest, then it will be not only legitimate, but 
necessary for the State to interfere. For example, if 
the frequency of strikes cr lockouts, or the magnitude 
of a particular strike or lock-out, causes serious incon- 
venience to the consumers, the Government may 
impose its veto with perfect justice and enforce a 
settlement by compulsory arbitration : for all abuse 
of liberty when objectionable to society at large, 
becomes a crime, and all crime it is the Law's function to 

* There is another consideration which seems to point a different 
way, and which would lead to a Syndicalist rather than a Socialist 
solution of the coal-mine problem. Although the financial risk of 
mining is borne by the mine-owner, another yet more vital risk is borne 
solely by his employees — I mean the personal risk to life and limb. 
Even a high wage seems scarcely an adequate compensation for the 
dangers which these men run ; and that the profits of their risk-taking 
should go to a man who does not share it, seems less than justice. 
There is therefore much to be said for the scheme whereby the mine- 
owner would be content to receive some fixed standard of remuneration, 
while allowing the miners themselves to make what surplus profit they 
can out of their perilous occupation. The same argument would 
perhaps be equally applicable to the Mercantile Marine. 



240 NEW FALLACIES OF MIDAS 

prevent. Again, the State will have a direct interest 
in maintaining the efficiency of national production ; 
and its further interference will be called for, when 
that efficiency is seriously impaired by the conse- 
quences of unrestricted competition. Thus, if 
Capital seeks to reward Labour with less than a living 
wage, the State will have a word to say. For it is 
obvious that to maintain an industry whicii cannot or 
will not offer a decent livelihood to its employees, 
is bad national economy ; since the national efficiency 
depends upon the health and vigour of its citizens and 
therefore upon the standard of life which they enjoy. 
Capital then cannot be permitted to secure its profits 
at the price of the people's health. Nor upon the other 
hand can organised Labour be allowed to misuse its 
power at the expense of Capital. We know that a 
certain minimum standard of remuneration is necessary 
if individuals are to be induced to save at all ; so to 
deprive Capital of its rightful share of profits is a 
suicidal policy which will either discourage men from 
saving altogether or will drive them to invest their 
capital abroad. It will therefore be the State's 
duty to defend the rights of Capital no less than the 
rights of Labour, and a sane public opinion would 
undoubtedly refuse to endorse the exorbitant demands 
of labour, should such demands in fact be made. If 
(as is likely enough) there are industries which will 
prove incapable of supporting this two-fold burden, 
these must either abandon the struggle and cease 
working or (if considered indispensable to the com- 
munity's existence) must be bolstered up by a system 
of State aids or bounties. To this, however, there 
would be one inevitable corollary. Wherever bounties 
are accepted, a corresponding obligation is incurred ; 
and if a particular industry or a particular group of 
employers is guaranteed against the accidents of 
demand or against the stress of foreign competition, 



COMPROMISE 241 

then they cannot possibly deny the State's right to 
investigate their methods, and insist upon a proper 
use of their resources. How far the State would exer- 
cise this right would depend on circumstances ; the 
scope of its authority would naturally be in proportion 
to the assistance which it gave. Were it for instance 
to undertake (as Sir Leo Chiozza Money thinks it 
should) the entire organisation of the country's food 
supply, buying the produce from the farmers at a 
bonus price and handing it on in turn to the retailers, 
then it is clear that the State would be in a very strong 
position. The same national necessity which make 
it needful to encourage British agriculture, demands 
also that British agriculture should be efficiently 
conducted ; not only would the State supervise the 
teaching of agricultural science, subsidise chemical 
research, provide co-operative machinery, and indicate 
the best methods of increasing our production ; but 
it would have every right to insist upon its advice being 
taken ; it could press the farmers to make use of these 
facilities and even penalise culpable inefficiency or 
waste. Industries less dependent on public aid would 
not be equally at the beck and call of government 
departments. The degree of State control Would 
vary, as it varies among secondary schools and uni- 
versities which receive financial grants from the 
Exchequer. But in any case the State's right of 
interference would not relieve the individual farmer 
or capitalist of his personal responsibility. For he 
would not as under Socialism, be the State's servant ; 
nor would the State be owner of factory or farm. 
Where each had a stake responsibility would be shared ; 
and both would be working in co-operative partnership 
for the good of the community at large. 

To such a course there are however many draw- 
backs, the more liberal school of politicians are strongly 
opposed to it ; and hitherto at least they have received 



242 NEW FALLACIES OF MIDAS 

the backing of the nation. The events of the next few 
years (and niore particularly the terms of the peace 
settlement) will decide the issue. If complete victory 
is granted to the allied cause, we may be almost 
certain that the Free Traders will have their way. 
They hold that it is not only unnecessary to prop up 
home industries by artificial means, but also positively 
un\^ise, and they are not without logical grounds for 
their belief. Economic self-sufficiency, they argue, may 
seem at first sight to offer us greater security in time of 
war ; but in actual fact, it has been otherwise. It was 
our very dependence upon the supplies from overseas, 
that built up for us a mercantile marine capable of 
maintaining the welfare of our population and the 
efficiency of our armies throughout these years of 
stress ; and had we endeavoured, as the enemy have 
done, to be self-contained and self-supporting, it can 
hardly be doubted that we should have suffered the 
same scarcity and privations that they have done. 
We may expect therefore that in the future not only we 
ourselves, but other nations too (upon the Allied 
side at least) will welcome more and more a free inter- 
change of commerce, each prodiicing that which by its 
resources and abilities it is best fitted to produce, and 
each looking upon the activity and enterprise of others 
as complementary rather than antagonistic to its own. 
Free Trade is after all, the economic counterpart to a 
league of free peoples ; and, commercial inter- 
dependence is the surest guarantee of the world's 
peace. The wise government therefore will allow 
national industry to follow its natural course. Some 
special facilities, where such are needed, it will doubtless 
be prepared to give. A natural monopoly (such for 
instance, as the milk supply) which the Government 
does not wish to take into its own hands it may well 
place in a privileged position, and regulate in much the 
same manner as it regulates the private gas companies 



COMPROMISE 243 

to-day. But, for the rest, the State will not seek to 
meddle in affairs which are not its own ; rather, it 
will leave the enterprise of individuals to find a natural 
outlet. At home, it will not foster one trade or assist 
one class at the expense of others. It will enforce no 
special policy upon them, and take no sides against 
particular countries abroad. 

As between employees and employed, the State will be 
an impartial witness of the industrial tug-of-war. It will 
not endorse the claims of the workers, because the 
workers are numerous ; neither will it favour the 
capitalist because the capitalist is powerful. Demand 
and supply will still continue (except for the limitations 
above mentioned) to regulate the market. The rise 
and fall of wages and profits will not be governed by the 
arbitrary justice of some State Department ; but by 
the natural working of economic laws. The reforms 
of the future will not proceed from political agitation 
nor from a tyrannical use of the majority vote, but 
rather from a mutual good- will and agreement between 
capitalist and worker ; and to the relations which will 
exist between these two we now must turn. 

(2) First and foremost, it is clear that the general 
control of industrial policy will lie with the capitalist.* 
His right of choice in the disposition of his savings we 
have already seen to be an essential feature of a free 
economic society, and that right must, within limits, 
be secure to him. Besides this, he will be naturally 
fitted, both by character and by training for the 
organisation of business. No working man in his 
senses ever denied the value \ji brains, and the man 
who rises to a position of command in business as in 
other walks of life, must needs possess a natural genius 
for his task ; the less he is hampered in the use of his 
qualities, the more he will be likely to achieve success. 

* Ultimately, as will later appear, this class will come to include 
employees as well as employer. 



244 NEW FALLACIES OF MIDAS 

It is for the capitalist therefore to initiate and direct 
the policy of his business, to keep a watch on the world 
markets, and adjust his methods to their fluctuations, 
to co-ordinate the working of the several departments 
and select their heads, to confer with experts and 
appraise the value of inventions and improvements, 
and above all to supervise the whole financial system 
from the framing of the annual budget down to the 
purchase of a new machine. He takes his natural place 
as it were captain of the ship, whose duty it is, while 
others trim the sails or stoke the engines, to set his 
compass for the port, calculate distances, and resolve 
what course the ship shall take, and who, from his point 
of vantage on the bridge, can bring her safe through 
dangers of reef and current of which his subordinates 
are but dimly, if at all, aware. The capitalist then will 
will still remain a commanding and powerful figure 
in the economic world. It is true no doubt that the 
inevitable tendency of modern finance is apt to dim- 
inish the direct and personal control of individuals. 
Industries are being grouped in vaster units and run 
on more comprehensive lines. Already small firms 
are being crushed out or absorbed by bigger houses. 
Shipping lines are amalgamating : so are the banks. 
It is the same in every section of industry. And one 
result of such a development is obvious. The indi- 
vidual capitalist can no longer remain in absolute 
control of these large-scale concerns. They are run 
extensively on capital borrowed from numerous 
investors ; they are organised and administered by 
salaried managers ; and the original proprietor retains 
little more than a controlling share in the company's 
finance and a place on the directors' board. Yet even 
so his power is still considerable. Whether he remains 
(as in very many instances he does) the actual manager 
and business head, or whether he delegates this task 
to others, admits the investing public into partnership, 



COMPROMISE 245 

and merely watches the use and disposition of his 
capital with a remote but jealous eye, there is none 
the less for the capitalist responsibility enough ; his 
obhgation cannot be shirked ; and while he has a trust 
to perform to other shareholders, he has an even greater 
duty towards men in his employ. It is according to 
his method of discharging this duty, that the true 
success or failure of his management is to be measured. 
The wise ship's captain who understands the art of 
leadership, knows that, if he is to deserve his crew's 
confidence, he must give them his ; and so, too, the 
employer will recognise that he cannot get the best out 
of his men unless he allows them to share responsibility 
with him. This he may do in two ways. First, he 
will consult them freely upon all points where their 
own interests are affected. Not many years ago it was 
thought beneath the dignity of an employer to enter 
into such relations with his men. In 1911, the Railway 
Unions went out on strike because the Company 
Directors refused to meet their representatives or 
even to acknowledge their existence. But there has 
been a significant change since then. During the war 
industrial committees have been set up in which men 
and masters sit side by side.* The advantages are 
twofold ; the masters may often obtain valuable 
advice concerning the details of organisation, and learn 
the simplest and most agreeable method of getting the 
work done. On the other hand, the men will be better 
able to appreciate the difficulties of their employer, and 
to take a long-sighted view of plans and projects, and by 
means of this greater knowledge to reconcile their 
fellow Unionists to necessary changes. Thus, when 
during the war the scarcity of cotton compelled the 
mill- owners to curtail the working hours, the repre- 

* In adopting the recommendations of the Witley Report (1917), the 
jovernment propose to apply this principle to ail industries under 
their control. 



246 NEW FALLACIES OF MIDAS 

sentatives of the mill-hands, sitting in consultation 
with thena, were given a clear statement of the whole 
position, and so were able to convince the others that 
this step was due to actual deficiencies of raw material 
and not to the selfish policy of the employers. Such a 
reform, however, will not in itself suffice, unless it be 
followed by another ; a large measure of self-govern- 
ment must also be conceded to the work-shop. Experi- 
ments have already been made in leaving the control 
of discipline and conditions in the hands of the 
employees ; and these have met with astonishing 
success. They have proved beyond question that the 
workers can be trusted to settle questions of pro- 
motion and dismissal fairly, to vote on working hours 
and holidays without prejudice and (most important 
of all) to choose the right men to be their own officers. 
This last is a vital principle of reform. Past experi- 
ence has shown that the foremen appointed by a 
manager are generally far more unsympathetic towards 
the rank and file than the manager himself. It is not 
altogether their own fault ; for the foreman's is a 
difficult position, and on him falls all the odium of carry- 
ing out unpopular instructions. In any case he is too 
often the cause of much unnecessary friction ; but 
with stewards holding their authority in part at least 
by popular election, the danger of friction would be 
greatly eased. They would form a connecting link 
between men and masters, being answerable to both. 
And there would be little real danger that either the 
stewards themselves would betray the trust, or that! 
those beneath them would challenge their authority. 
All sane men are fully conscious of the need for discipline, 
and though they may resent it when imposed upon 
them from above, yet such hostility v/ould cease, if the 
responsibility for maintaning it were placed upon 
themselves. The autonomous work-shop would in 
fact reproduce in many features the prefect system of 



COMPROMISE 247 

our public schools, with which it has often been 
compared,* And this systera is a serviceable model as 
well as a sound analogy ; for it is something more than 
an antidote for insubordination or a safety valve for 
discontent. It is an education in itself, a training in 
responsibility which can develop, as nothing else can, 
that special genius of the English race, the capacity 
" to govern and be governed," which is the true secret 
of our national liberty and greatness. 

3. It remains for us to ask how far this compromise 
will satisfy the workers. Will they be willing upon 
these conditions to accept the supremacy of the 
capitalist ? Or will they still desire to be rid of him 
altogether and to remove the objectionable necessity of 
service ? Now in answering this question it must first 
be said that if industry is to be carried on at all, it must 
be organised; and organisation is impossible without 
discipline and authority. Capitalist or no capitalist 
somebody must command and somebody must obey : 
and there seems no real reason for supposing that 
obedience to a Socialist Government or to a Syndicalist 
Guild would be more agreeable to the individual than 
obedience to a capitalist employer. Indeed the latter 
might easily appear to be the lesser of two evils ; for 
whereas there would be no alternative to the service of 
Guild or Government, the employee who is dissatisfied 
with one master is always free to seek service with 
another. In theory at least, he has the option between 
continuing his contract or closing it, he has therefore 
no just cause to quarrel with a contract which is made 
of his free choice. That contract it is true is a contract 
of service ; and since under no system can we all be 
masters, some must of necessity accept a lower room. 
There is nothing derogatory about service, the soldier 

* Mr. Selfridge has adopted the very phrase in the attempt to 
institute a system of self-government among his own emplo)7ees. See 
his recent book on the " Romance of Commerce." 

17 



248 NEW FALLACIES OF MIDAS 

must render service to his general, the clergyman to his 
bishop, even the cricketer to the captain of his team ; 
and there is no reason in the world why the working 
man should object to engaging himself to a master, if 
the terms of the engagement are reasonable and just. 
Provided that these terms allow him such a measure of 
responsibility or independence as we have described 
above, there remains but one point to which the 
working man might fairly take exception ; and that 
is the question of profits. 

We need not here repeat the reasons already given for 
his dissatisfaction with the present system, except to 
say that they seem often real enough. But let us 
restate the problem in its simplest form. There are 
three agents in production ; first the hand-labour of 
the artisan, second the head-labour of the managing 
directors, and third the mechanical paraphernalia 
which represents invested capital ; and of these the 
last two are frequently, but not always, united in a single 
person or a group of persons. Now the first claim 
upon the proceeds of production is naturally the 
worker's ; whatever happens, his wages must be paid. 
If there is a salaried manager, his share is equally secure. 
The surplus, when these deductions have been made, 
goes to the capitalist, and this on the face of it seems 
fair, seeing that his claim can only be considered when 
the other two are satisfied, and that the risk is therefore 
almost entirely his. But though to this extent his 
claim to the surplus is well founded, yet there is 
another side to the question. After all it is not the 
capitalist that has himself produced the surplus. 
Any increase in the output of the factory is not due 
to him ; it is due to the skill of the management and 
to the energy of the workers. Naturally then the 
workers will ask why they should work extra hard that 
the capitalist may be enriched ; and why they should 
have no share in that which their extra labour has 



COMPROMISE 249 

produced. If production is indeed to be considered 
as a partnership between capital and labour, then it 
seems that there must also be a fair division of the 
spoils. Profit-sharing or co-partnership is no new 
invention. It is an experiment which has frequently 
been tried ; but for one reason or another it has 
more often met with failure than success. The cause 
of the break-down however has arisen, not from any 
inherent weakness of the scheme itself, so much as from 
the practical difficulties of its application. It has 
failed, partly because the workers are not easily con- 
vinced that their own share is proportionate to their 
deserts ; but even more because they mistrust the 
fundamental honesty of the capitalist's intentions. 
They will not readily believe in the goodwill of a man 
whom they have learnt to regard as their natural 
economic enemy ; and they see in every offer of 
co-partnership a stratagem for extracting a maximum 
of work by a cheap and wholly inadequate concession.* 
Such suspicions may or may not be well founded ; 
but though under the present circumstances they seem 
to be a fatal bar to all profit-sharing schemes 
whatsoever, that is no reason for condemning such 
schemes outright. Once the ground for suspicion is 
removed, and a mutual confidence is re-established, 
a basis for compromise and equitable partition could 
undoubtedly be found. 

For all this it cannot be easy, indeed, it is quite 
impossible to satisfy both parties, unless both are 
prepared when needful, to make some sacrifice for the 
common cause. Most often the burden of sacrifice 
will fall on the employer. For, it must be remember- 
ed that if being something more than a mere investor, 
he manages the business by personal direction, he has 
in fact a very real claim upon the larger portion of the 

* The practical difficulties of Profit sharing and Co-partnership are 
more fully explained in the note at the end of this chapter. 



250 NEW FALLACIES OF MIDAS 

profits. What contributes most to the success of 
industrial enterprise is not the hand-labour of the 
men, but the brain labour which organises and directs 
it. It is by thought and calculation and foresight 
that large economies are effected, processes improved, 
new machinery installed ; in these and in a hundred 
other ways one skilful organiser can do more to increase 
the profits, than the industry and efficiency of a 
thousand factory hands. So the employer's claim to 
the larger share of profits is genuine enough ; and if 
money-making were his only object, there would be 
justice in it too. But we know that profit is not the 
only spur to effort and endeavour. There is many a 
man working for a fixed salary, who will do his best 
though it should not add one penny to his income. 
For such a man, and for the capitalist no less, there 
are other compensations, other rewards, the satis- 
faction of prosperous enterprise, the sense of power, 
the pride in a task efficiently performed and in its 
usefulness to man. Enjoying these in a greater degree 
perhaps than other men, it is little enough surely to 
ask of the capitalist that he should not grudge his 
employees a share in the fruits of his success ; and 
though it may be hard enough to assess the relative 
values of manual and intellectual labour (for it is 
always hard to compare two incommensurable things) 
yet it is surely not beyond the wit of reasonable men 
to come to an agreement. 

There remains however a second difficulty to be met, 
and herein it will be the worker's turn to make some 
sacrifice. Just as for the capitalist there can be no 
profits without risks, so, too, the workers cannot expect 
to reap the benefits of success, without sharing the burden 
of failure. Common justice forbids the alternative of a 
one-sided bargain. It cannot be " heads I win and 
tails you lose " in the parnership between capital 
and labour. If the workers share the profits, they 



COMPROMISE 251 

must share in the losses also. And here it is that 
the difficulty arises, for it is abundantly clear that to the 
individual worker, with his too slender margin of 
resources, such losses may mean nothing short of 
complete catastrophe. 

For we cannot expect the artisan out of his two 
pound wage to make good a loss which might cut 
down his weekly income to a pound. If the mischances 
of industry are to be met even in a small degree out of 
his pocket, some better scheme must be found. Can we 
in other words advise some form of insurance whereby 
to distribute and diminish the incidence of losses ? 
There is, as it so happens, a convenient precedent to 
follow ; of profit-sharing schemes the most satisfactory 
is known as the shop-piece-work system. The principle 
of this i s simple enough ; when the time comes to 
make the distribution of the profits, instead of assessing 
each man's share in proportion to his individual 
out-put, the basis of division is reckoned by the united 
out-put of the shop. By this arrangement the weaker 
members suffer no handicap ; each will do his best for 
the good of all ; and by the force of public opinion and 
the sense of common interest a high level of industry 
will be maintained. Now if this scheme were further 
extended to include not merely the members of a single 
shop, but a group of factories or perhaps even an entire 
trade, it is easy to see how the difficulty of losses might 
be solved. For being thus widely spread, the losses, 
if not altogether negligible, would not at any rate be 
crippling. At any given time it will be tolerably certain 
that while one particular factory may suffer failure, 
the majority would succeed, and upon the whole 
reckoning there would still be a balance of profit to 
distribute. Whether or no the employers also would 
choose to pool their resources in a similar manner, is for 
themselves to decide ; but, as we have said above the 
natural tendency of the future will lie towards a greater 



2 52 NEW FALLACIES OF MIDAS 

concentration and co-ordination of industry. The firm 
with a million pound capital will probably become 
more common ; the firm with a hundred thousand 
pounds capital more rare. And in the main this change 
will be all to the worker's good. Where the small 
capitalist must in self-defence be niggardly and grasp- 
ing the larger firm can afford to be generous. The 
man who controls niany factories will not only be less 
eager over trifling profits, but he will be more proof 
against dangers of incidental failure ; he can take the 
ill luck with the good, and play off a gain here against 
a loss elsewhere. The very magnitude of his resources 
will give stability to his position, as well as open up fresh 
opportunities of organisation and scientific enterprise. 
By all this the workers will also benefit ; they will be 
less likely to incur any overwhelming losses ; and no 
special machinery may be needed to protect them 
against such accidents. In any case, however, it is 
clear that with proper adjustment they could be 
made capable of bearing their share in the losses as 
well as enjoying their share of the profits ; and there 
seems no sufficient reason, either on this score or on 
any other, to reject the system of profit-sharing as a 
basis of industrial compromise. Nor need we fear the 
failure of a system which thus presses the principle of 
partnership to its logical conclusion. For it does more 
than call a truce to the competition between capital 
and labour ; by uniting them as it must not only in 
the pursuit of a common interest, but also by the 
acceptance of a mutual sacrifice, it will awaken a more 
generous spirit of co-operation and so lay firmly the 
strong foundations of an enduring peace. 

That this arrangement is practicable, we need not 
doubt. But the last word has not yet been said. 
Such a compromise cannot be regarded as a final 
solution of the problem of industry, and it falls short of 
finality for the very simple reason that sharing in 



COMPROMISE 253 

industrial profits is not the same thing as sharing in 
industrial property. Now it is clear that either we have 
been right in what we have said about the advantages 
of owning property, or we have been wrong. If we 
are right, and if the sense of ownership is a real stimulus 
to effort, enterprise and thrift, then we cannot in 
justice deny to the employed what we have commended 
in the case of the employer. We cannot be contented 
with half measures ; and once we are prepared to per- 
petuate Capitalism, there can be no stopping short 
until we have ensured that labour should become 
capitalist too. Happily, there is no great obstacle 
to such a development ; indeed there are abundant 
signs that it is coming. The working class are already 
investors on a considerable scale ; and by that I mean 
something much more than the possession of a trifling 
balance at the Savings Bank. They hold shares in 
every sort of business, and derive from these an income 
which in 19 10 was estimated at thirty millions. But 
perhaps the most interesting example of industry 
capitalised in no small degree by working folk, is to be 
found in the Co-operative Societies of consumers, of 
which we spoke above. It has been asserted, though 
probably with some exaggeration, that one-third of the 
country's retail business is already in the hands of the 
co-operatives. The movement has clearly a great 
future ; it is sure to spread, since it attracts members 
by the double inducement of low prices and a bonus 
divided on surplus profits ; and, though the range of 
its extension is obviously limited by the fact that the 
number of commodities to which it can be applied is 
also limited, yet it will, within those limits, do most 
valuable service by encouraging the habits of economy 
and investment. At any rate it is not too much to say 
that thrift is gradually becoming popular among the 
masses ; and, what is more important, it is becoming 
now for the first time possible. So long as the income 



254 NEW FALLACIES OF MIDAS 

of the working man was barely sufficient to provide 
him and his family with the necessities of life, it was 
not merely difficult, it would have been definitely 
wrong for him to save ; for saving would have meant 
that he or his children must go short of proper nourish- 
ment and comfort. That was the dilemma with which 
in the past the majority of the working class was faced. 
But the turning point has come, and we now see a 
clear promise of better things. One great result of the 
war will be to establish a higher standard of remunera- 
tion for every kind of labour. On this Labour will 
itself insist and will take no denial ; even if bad times 
or trade depression follow the return of peace, they 
will not in the long run be sufficient to prevent though 
they may postpone the change. Whatever economic 
difficulties lie immediately ahead of us, we may be 
confident that they will be but a passing phase, and that 
given the energy and the will to overcome them, we 
shall emerge far more prosperous and far more secure 
of progress than we were before. The last three years 
have witnessed a far-reaching revolution in the 
mechanical methods of production, which is perhaps 
without a parallel in history. Improvements and 
inventions have been made for which we might without 
the w ar have waited half a century. And if we turn our 
opportunities to proper use, then the possibilities of 
labour-saving machinery, scientific management and the 
consequent multiplication of industrial out-put are 
almost unlimited. As a consequence the nation's 
wealth will increase by leaps and bounds ; and Labour's 
chance vvill have arrived ; in this new wealth the 
workers will claim a share and they will get it. Nor 
is there any reason to doubt that it will be a far more 
generous share than in the past,, This (provided the 
profits of industry are great enough) will involve no 
prejudice to the just claims of capital, for that will 
receive at least the same standard of remuneration as 



COMPROMISE 255 

before. It is not that the capitalists will receive less, 
but that the working man will receive more ; and 
when that happens, he will be under the necessity no 
longer of consuming all that he earns. He will be able 
to save and by the investment of his savings to join 
the ranks of the capitalist class. 

With wages sufficient for his wants, and an ample 
margin for investment, it might well be thought that 
the working man would have attained the summit of his 
hopes. Yet even so there is one last step to be taken 
before the old reproach of wage-slavery can be done 
finally away. When we claim for property (as we 
have claimed above) that it brings out a man's best 
gifts, stimulates his interests, spurs his energies, and 
teaches him the lessons of independence and responsi- 
bility, it is not so much of the mere possession of 
property that we are thinking but rather of the active 
use of it. Deep down in every human being there is 
planted, it would seem, something of the creative 
instinct of the artist ; and we take an artist's pride in 
all effort expended upon that which is peculiarly our 
own. From the millionaire who watches over the 
business it has taken nim a life-time to build up, down 
to the peasant proprietor who comes as it were to know 
and love every animal and plant upon his farm, it is 
always the same story. It may be that man is 
incorrigibly selfish ; yet we must take him as we find 
him. It is a law of his nature that the more stake he 
has in any enterprise, the greater will be the zest he 
will throw into his task, and the greater the happiness 
that it will bring him. If, therefore, we accept this 
law, it will not content us that the working man 
should invest his savings somewhere. He must be 
able to invest them in the iirm or factory where his own 
work lies. His interest in the prosperity of the business 
must be no longer the indirect interest of a servant, it 
must in some degree be the direct interest of a pro- 



256 NEW FALLACIES OF MIDAS 

prietor. His alliance with capital which begins in 
co-operation, must end in a genuine partnership. He 
must become in a real sense his own employer. Now 
to such a course the way does not at first sight seem 
easy. There are, it is true, many joint-stock com- 
panies, the shares of which are open to the public 
purchase ; but in a large majority of manufacturing 
firms, this is not the case ; the financial interests are 
vested either with a single family or with a close ring 
of private partners. To expect these voluntarily to 
forgo so valuable a prize and to surrender even a 
proportion of the shares to mere employees is to expect 
impossibilities ; and the advent of co-partncxship 
might be indefinitely postponed, were it not for one 
favouring circumstance. For the truth is that the 
contribution of the employees will be needed. As time 
goes on industries will tend (for the reasons mentioned 
above) to be organised upon a larger scale. Firms 
which have done business on a capital of £100,000 
will drop out ; and their place will be taken by com- 
panies which will count their capital by millions, and 
these will have a constant tendency to expand. There 
will be an enormous demand for fresh money, which 
the existing shareholders will be quite unable to meet ; 
shares will then be offered to the public ; and for the 
working man who has savings to dispose of, the door 
will then stand open. Such a development may yet 
be a long way off, but that it is possible has been proved 
already in the Cotton Trade. There it has long since 
been the fact that the Loan Capital is largely subscribed 
by the mill-hands themselves, and there seems no valid 
reason why what has succeeded in one trade should not 
be extended to others. Given the power and the 
opportunity the working man will not be backward to 
invest ; and sooner or later the day may yet arrive 
when he will have a considerable part, perhaps even a^ 
leading part in the capitalisation, and so a definite 



COMPROMISE 257 

share in the organisation also, of his own industry. 
What a reversal of present day conditions this would 
involve it is not difficult to see. Picture for a moment 
the practical changes which would inevitably follow. 
The annual meeting between the Shareholders and 
Directors of the Company would no longer be attended 
by a mere sprinkling of haphazard critics, only partially 
interested, and for the most part wholly ignorant of the 
detailed working of the business. In their place would 
sit an eager gathering of foremen and managers, 
operatives and clerks, — each of them possessing expert 
knowledge about the details of his own department, all 
of them equally intent to criticise mistakes, to air their 
grievances, suggest new policies, and promote the 
common welfare of the whole establishment. The 
election of directors would now have become a reality ; 
representatives would not be chosen for the sake of 
some high-sounding title or upon a hearsay reputation 
for sagacity. The coveted honour would be bestowed 
on those who had served their apprenticeship under the 
jealous eye of their fellow workmen, and who had proved 
themselves not unworthy of the trust. For chairman 
they would naturally nominate the one time master of 
the business — the capitalist employer ; and provided 
always that he retained the confidence and good^^ill 
of his new colleagues, he would continue to exercise the 
influence and authority to which his large stake in the 
concern entitled him. If, however, through negligence 
or intractability on his part he were to forfeit that 
confidence and fail to secure his re-election to the 
Board, his position would be wellnigh intolerable. 
In all likelihood he would be driven to sell his share of 
the capital ; and either his place would be taken by 
others who were in better sympathy with the poHcy of 
the shareholders, or else the shareholders themselves 
would combine to buy him out. Such an occurrence 
would no doubt be rare ; the shareholders would be 



258 NEW FALLACIES OF MIDAS 

too discreet lightly to abuse their power ; they would 
be too much interested in the prosperity of the concern 
to flout the man whose practical abilities have been 
proved by his success, and whose interest would after 
all be identical with their own. Yet the fact remains 
that they would virtually possess the power to retain 
or to discard upon a vote of confidence the services of 
the very man who in former days would have stood 
to them as master. The truth is that economic 
evolution would but have followed the same lines that 
our political development has already taken ; and 
just as the country is governed no longer by an absolute 
monarch owing responsibility to no man, but by a 
minister who is the people's servant and who derives 
his whole authority from the support of popular 
opinion, so the arbitrary power of the capitalist 
employer would have disappeared ; and the true 
industrial sovereignty would rest with the industrial 
constituents. The self-appointed autocrat would have 
become the representative governor. Yet, if he be 
wise and tactful, the capitalist need fear no loss of 
power. Government by consent is perhaps the most 
effective form of government that can exist ; a strong 
prime minister can do things, and work changes which 
no tyrant could ever have attempted. Seeing, there- 
fore, what advantages his financial strength and ripe 
experience would afford him, it would be a fool of a 
capitalist who could not keep his hand on the reins. 
He will exert his authority however not so much because 
he is the largest individual shareholder, but (what is far 
more) because he is the most valued servant of the 
firm. By virtue of the same qualities which made him 
master, he will remain master still ; and, although his 
monopoly of capital will have gone, nis monopoly of 
knowledge and experience will remain. For the power 
to render service will then be the measure of a man's 
importance. When all are capitalists, the natural 



COMPROMISE 259 

order of things will have returned ; and the skill of the 
human hand or human brain will be supreme. Man 
the producer will no longer bow down to whoever 
owns the mechanical agents of production, craving the 
use of them and selling his services for bread. Rather, 
forasmuch as he has skill to use them, they will gladly 
be offered for his use, just as money which men can- 
not themselves turn to profit, is put at the disposal 
of a bank which can. Capital, in short, will no longer 
hire labour, hut labour [ivhether of hand or brain) will 
hire capital. The tables will have been turned. 

Thus, after all, the Syndicalist's dream will have 
come true, though not in the way he had expected. 
The producer will indeed have come by his own, but not 
by the forcible expropriation of the capitalist. The 
Syndicalist in fact, was at once both right and wrong. 
His error, like the Socialist's, springs from a crude 
impatience and from a narrowness of vision. Both of 
them see things with the partial eye of the theorist 
who imagines that in his own theory the whole of truth 
is contained. They are intolerant of rival philosophies 
and can scarcely be persuaded but that there exists 
some single panacea which will set the whole world to 
rights. Yet truth, they might have remembered, 
has many faces ; the theories of Syndicalist, Socialist 
and Individualist as well, are complementary and 
compatible rather than contradictory or exclusive. 
For each has seen some side of the truth. In part the 
Socialist is right ; for there are indeed many functions 
of production which are best to be managed by the 
State ; in part the Syndicalist is right ; for the power 
to produce is what ultimately counts. In part, too, 
the Individualist is right ; because it is for a man 
himself to shape his own character and destiny. So in 
the evolution of the perfect Society, each of these three 
theories will play its separate part, and each contiibute 
to the formation of a concerted whole. By what 



26o NEW FALLACIES OF MIDAS 

precise steps that Society will be evolved, time alone 
will show. One thing is certain. Theories will not 
of themselves accomplish it. Changes will proceed 
from the slow and steady pressure of our economic 
needs, rather than by the eager anticipations of 
reformers. Long before the very idea of Socialism 
had been conceived of, it was the people's need, and not 
some philosopher's catch-word that gave Athens a 
State-theatre ; and all nations must be obedient to 
the same compelling logic. Among ourselves the 
natural monopolies will one by one be nationalised, as 
the advantages and economies of State control come 
home to us. So again, as years go on, the better 
education of the workers will fit them for responsibility ; 
increasing prosperity will place the acquisition of 
capital within their grasp ; and then. Syndicalism or 
no Syndicalism, they will inevitably receive a share 
in both. And meanwhile, whatever attacks, in Press 
or Parliament or on revolutionary platforms, may 
menace the capitalist's position, he will stand secure 
against them all. Even if he is temporarily removed 
he will return. The Bolshevist imagines in his foolish 
heart that by destroying the capitalist in Petrograd, he 
will have struck a death blow at capitalism itself, but 
before the year is out, he will surely find himself at the 
mercy of a capitalist who keeps shop in Berlin or 
New York. The capitalist cannot be ousted, because 
he is indispensable. He is the embodiment of the three 
most vital elements of economic life, brains, enterprise, 
and thrift, and to deny the individual the free use and 
just reward of these is to strike at the fundamental 
instincts of human nature. And human nature, 
despite man's own efforts to defeat it, must assert itself 
and in the end prevail. As the world pursues its 
course onward through the centuries, there will doubt- 
less be false starts, tragic blunders, and fierce reactions. 
It will pass through many phases. It may well be 



COMPROMISE 261 

that at one time or another it will v/itness the Socialist 
State or the Syndicalist Society in being, just as some 
would say that we have already had the Individualistic 
Society. They will not last. For taese are able to 
satisfy but one side of human nature and no more ; 
but in the perfect society, if man has patience to 
await its coming, every side of his nature will find its 
adequate fulfilment. 



(iii.) 

And now, perhaps we need to remind ourselves 
that we are living in the present, and are face to face 
witn the problems of to-morrow. 

Prophecies cannot help us greatly ; and though we 
have sketched the lines of the ideal compromise it 
must be admitted that the lines are vague. Yet 
perhaps it is better so. The most elaborate and clear- 
cut of political codes is not always the most permanent 
or the most effective ; rather it is the vague elastic 
structure of the English constitution which commands 
the admiration of the world. Strict definition of powers 
and functions which leaves no room for change and 
growth can give no guarantee of permanence ; for 
the machinery wnich the human mind creates to-day, 
it will outgrow to-morrow ; and no system can impose 
an artificial harmony which does not exist in the pur- 
poses of men. So, whatever the form it takes, the 
compact between Capital and Labour must depend in 
the last resort upon the goodwill and good sense of either 
party. Both must be prepared to bear in some degree 
the other's burdens ; both strive to comprehend the 
other's mind. By the spirit of " sweet reasonableness " 
and self-restraint without which our political system 
would long ago have resulted in chaos, we have in fact 
achieved unity, order and continuous development. 
And the same spirit may yet in the future serve to 



262 NEW FALLACIES OF MIDAS 

work the same miracle upon the warring elements of the 
economic world. 

One word should perhaps be added in conclusion. 
Good will, as I have implied, is not of itself enough ; 
good sense is also needed. The best intentions are no 
substitute for brains ; and business must still be 
business, not philanthropy. Nor would the workers 
themselves desire to have it otherwise ; they ask for 
justice, confidence and consideration, but not for 
sentimental indulgence ; and the ideal employer 
will give them what they ask. He will neither pamper 
them with ill-timed bounty nor harass them by fussy 
interference. Small good can come of a spurious 
paternalism which does everything for the workers 
that they ought to do for themselves. It is idle to 
furnish them with swimming baths and libraries, 
concert halls and playing-fields if thereby they are 
robbed of those opportunities of self-help and inde- 
pendence which count most in the making of men. | 
Nor on the other hand will the ideal employer lose ' 
sight of his wider duties towards Society at large. His 
is indeed no narrow responsibility. The influence of 
his actions is felt far beyond the circle of his ov/n factory 
hands and the results of his policy will outlast his 
life-time. As much harm may be done by running his 
business at a loss for charitable ends as by the most 
shameless profiteering. Certainly he will earn no 
thanks from the general public, if he overpays his 
employees at their expense ; and, if through the 
expenditure of his rightful profits in gratuitous gener- 
osity, he fails to increase his capital, improve his plant 
and develop his business properly, then he will but 
impede industrial progress by a mistaken sense of 
kindness. In short he must take wide views, consider- 
ing how trade will be affected by his policy, what too 
will be its influence on rival firms, and what on the 
consumer ; and while promoting the welfare of the 



COMPROMISE 263 

individual workers he will not forget the interest of the 
State whose members they also are. Between these 
many claims and counter claims the choice cannot be 
simple ; to reconcile them all requires a difficult 
combination cf self-sacrifice and worldly wisdom, 
uniting as it were the prudence of the serpent with the 
gentleness of the dove. So before the patriot employer 
there lies a task immensely complex, immensely 
arduous, and immensely repaying too. Then and 
then only will he have succeeded in it, when all these 
rival claims are reconciled, when, each in his allotted 
station, every single man whom he employs is enabled 
to exercise his best abilities both for his own good and 
for the good of all the others, and when, finally, each 
industry is so organised and so directed as best to serve, 
not the private advantage of employer or employed, 
but the healthy and prosperous development of the 
whole community. 

NOTE ON PROFIT SHARING. 

During the last hundred years many schemes of 
Profit-sharing have been tried, occasionally with 
success, but more frequently the reverse. Some 
schemes have proved in practice more serviceable than 
others, and though there is no wide divergence in the 
principle involved, there is considerable difference in 
the actual machinery employed. In some cases the 
workman receives an extra bonus which varies accord- 
ing to the amount of the out-put or the market price of 
the finished product. Thus in the iron industry, a 
furnace keeper is first paid his normal wage and then, 
over and above that, he gets an additional percentage 
according to the price of pig-iron. The bonus may 
be apportioned in two ways. It may go to the indi- 
vidual worker in proportion to the quantity or speed of 
his individual out-put ; or it may be divided equally 



264 NEW FALLACIES OF MIDAS 

among the whole body of workers, according to the 
aggregate out-put of the shop. The latter system is 
known as shop-piece-work. Another device aims at 
taking the employees into partnership and giving them 
a real stake in the industry. In this case the payment 
of the bonus takes the form of allotting the employees 
shares in the capital of the firm. On paper, each of 
these schemes would appear both reasonable and 
generous, but for one reason or another they have nearly 
always failed. Out of 300 profit-sharing experiments, 
initiated since 1829, only 133 survived in 1912. This 
failure is due in most cases to the opposition of the 
Trades Unions. To them all forms of Profit-sharing 
are equally odious ; and when in 1917 a writer to the 
Times discussed the conditions of industrial settlement 
after the War, he|declared that the mere suggestion of 
such an arrangement would be absolutely fatal. This 
opposition of the Unions is broadly speaking due to 
two causes. One is, more or less, a special and acci- 
dental cause, being bound up with the tactics of the 
Unions in the organisation of their forces. The other 
is more fundamental and challenges the whole object 
and principle of Profit-sharing. 

The first and special cause is briefly this. As we 
have shown the success of any Labour combination 
chiefly depends upon its ability to present a united 
front and act as a single body. Division is fatal ; it 
will never do, for example, if, when the miners of one 
pit are dissatisfied with their wages and decide to go 
on strike, their fellow unionists in the next county 
refuse to join them because their wage is satisfactory. 
It is an axiom of Trades Unionism that all must act 
together and the strong support the weak. Now 
under the profit-sharing system, the amount of the 
bonus paid to the workers will differ from mine to 
mine, and from factory to factory. The factory which 
is blessed with up-to-date machinery and an efficient 



COMPROMISE 265 

manager, will make large profits and the workers will 
benefit accordingly. A second, which is less fortunate 
in these respects will be less profitable, and the 
workers will be correspondingly ill-paid ; but when 
they endeavour to obtain redress they will receive 
no support from their more fortunate comrades. So 
there is a fear lest the solidarity of the Union be thus 
impaired ; and very naturally the Union leaders have 
been driven by this fear into opposing the whole policy 
of profit-sharing. Yet in the long run, such an objec- 
tion need hardly be fatal to the project. For, as the 
Unions win for themselves a more assured position, 
and as their members are educated more and more 
to realise the supreme importance of united action, the 
danger will disappear ; and when moreover the other 
ends which the Unions now hold in view are success- 
fully attained, they need no longer fight so shy of a 
certain disparity in profits. Perhaps however the 
surest method of setting such fears to rest would lie in 
an extension of the shop-piece-work system. If the 
bonus were calculated upon the aggregate profits of 
the entire trade, there would no longer be any ground 
for complaint. The members of the less prosperous 
factory would benefit by the prosperity of others ; 
and yet all alike would feel that their own earnings 
were dependent in some degree upon their own 
individual efforts. ^ 

So much for the first objection to Profit-sharing ; 
the second is more vital. It has its roots in the 
inveterate suspicion with which all employers are 
regarded. For the workers cannot as yet be brought 
to believe that the concession is ever offered from 
purely selfless motives. " Timeo Danaos et dona 
ferentes " ; such generosity doubtless conceals a trap. 
New most employers would not deny that one result 
of profit-sharing is to stimulate production. The offer 
of the bonus is a lure like the carrot hung before the 



266 NEW FALLACIES OF MIDAS 

donkey's nose to quicken its pace ; and the appeal of a 
higher wage is so strong that few workers can resist it. 
The question therefore arises whether many indi- 
viduals may not be tempted to work beyond their 
srength. High wages are undoubtedly capable of 
arousing men and women to unnatural efforts. It has 
not been the call of patriotism alone that has kept 
many munition workers at the lathe seven days in the 
week throughout the war ; such excess of energy 
cannot be healthy, and there is a real danger in the 
speeding up of production which is always the result 
and often the avowed object of profit-sharing. When 
Labour leaders and others are endeavouring to 
establish a universal eight-hour day, it is fatal to offer 
high rewards to individuals for working ten or twelve. 
And, besides all this, it is only fair to enquire 
how far the employer himself expects to profit by this 
increase of activity. If for instance ten per cent, is 
added to the total value of the out-put, by what right 
should he step in and claim one-half of the addition ? 
In point of fact, he usually claims more than that ; 
but taking his share at its lowest, it is hard to see how 
such a claim can be supported. There is therefore some 
real ground for the working man's suspicion that one 
way or another he is going to be " done." It is well 
within the power of an employer, for example, to 
manipulate the stock-taking and by keeping prices low 
to cheat Labour of its true deserts ; or again the 
apparent generosity of the bonus may often enough 
work to Labour's disadvantage in the end. For 
when in due course, the price of living goes up, and a 
rise in wages becomes due, the master can point to the 
bonus and pretend that it is the virtual equivalent ot 
a rise in wages ; whereas in reality it is nothing but a 
reward for extra service. These and many others are 
undeniable flaws in the profit-sharing policy. Partly 
they arise from real difiiculties of organisation and 



COMPROMISE 267 

control, but for the most part they are the results of 
the long standing feud between Labour and Capital 
and of the distrust and jealousy which that feud has 
bred. The first step towards a permanent agreement 
is to dissipate this tainted atmosphere ; and that 
nothing but good-will and sincerity can possibly 
achieve. The second step will be to discover some 
working principle of profit-sharing which will be not 
only just but agreeable to both parties, and to devise 
some machinery by which the proportion of the shares 
may be fixed and from time to time pass under revision. 



Chapter XVIII 
THE NEW FALLACIES OF MIDAS 

(i-) 

Stevenson's Fable of the Four Reformers contains a 
useful caution against too great zeal for rapid change. 
When the party of enthusiasts foregathered, each carne 
provided with a favourite panacea of his own. One 
wished to abolish Property, a second the Bible, a third 
the Laws. But the fourth was for no such half 
measures. " The first step," he said, "is to abolish 
mankind." And in that paradox Stevenson touched on 
the heart of the matter. The reformer who begins 
by pinning his entire faith upon institutions will end 
by losing his very faith in man. For it is not by 
institutions that man can be perfected. Change, if it 
is to come at all, must be change of our own selves ; 
and we can never hope to be truly happy till we have 
first become good and wise. The real clue therefore 
to the economic problem, as to most of the problems 
under the sun, is not to be sought through Parliaments, 
or Guilds or Charters, but through the education of 
the human race. Education can set the world to rights, 
and nothing else can ; but it must be education in no 
narrow or academic sense ; it must embrace all man's 
faculties and train all his powers ; firstly, his body, 
that he may be strong to labour and to produce wealth 
in abundance ; secondly, his mind, that he may have 
skill and science to make his labour yet more fruitful ; 
last and best of all, it will educate his heart, both that 
he may know wherein true wealth consists, and that 

268 



THE NEW FALLACIES OF MIDAS 269 

he may learn to use rightly the power over his fellows 
which wealth will put into his hands. For more than 
all else, it is his false ideals and imperfect sympathies 
that are the real enemies of his peace ; and not until 
the law of conscience is become the authentic law of 
the land will his troubles pass finally away. 

Let us not be deceived. It is no mere pedantry, no 
fanciful belief in the value of book-learning that sees 
in education the one sure panacea for the world's 
ailments. The child is father to the man ; and those 
who control or superintend the training of the young, 
hold in their hands the future destiny of the race. 
In its schools, as nowhere else, the character of a nation 
is moulded ; and it is by the national character before 
all that the great movements of history have been and 
always must be determined. Character founds 
empires or loses them ; prepares revolutions or sub- 
mits to tyranny ; and (nowadays at any rate) decides 
the issues of peace and war. Such things do not happen 
at haphazard. The nidden springs from which they 
take their rise are the ideals and prejudices, the fears 
and aspirations deeply rooted in the national conscious- 
ness. These spread and propagate with an unseen 
growth ; but in no soil are thpy more fruitfully 
implanted than in the adolescent mind. It was the 
professors and schoolmasters of Germany who sowed, 
while Europe slept, the tares from which grew War; 
and if the influence of these men, when directed to an 
evil purpose, was fraught with consequences so terrible 
and so momentous, what might it not equally achieve, 
if employed for the salvation rather than the destruction 
of mankind ? In England, public education is but 
half a century old ; and already we can mark the 
profound effect which it has had upon the welfare and 
prosperity of our people. It has reduced drunkenness, 
diminished crime, and raised the popular standards of 
decency and comfort. We can trace its influence in the 



370 NEW FALLACIES OF MIDAS 

demand for better housing and in the greater attention 
paid by parents to the rearing of their children. That 
it has awakened a real thirst for knowledge is proved 
by the vast output of cheap literature, wnich has given 
us reprints of the Classics at the price of sixpence, and 
popular handbooks on almost every topic of Science, 
Politics, and History. In the economic sphere, the 
results of education are perhaps the most remarkable 
of all. The habit of life insurance has grown enor- 
mously among the people. The figures speak for 
themselves. In 1880 the premiums paid annually 
amounted to thirteen million pounds ; by 1917 that 
sum had been multiplied fourfold. The quickening 
intelligence of the working classes has led to a clearer 
conception of industrial problems, a stronger deter- 
rnination for united action, and also a higher sense of 
their own responsibilities. Not least, it has increased 
the national efficiency. It has given to millions the 
training and intelligence which the manipulation of 
intricate machines and processes demands ; and every 
year our methods of technical instruction are improving. 
The soil is now prepared ; we have orly to give the 
people the opportunities they need and soon their full 
powers of intelligence and imagination might be 
brought to bear upon the task which lies before them. 
Almost within our grasp lies even now such wealth 
and prosperity as was beyond the wildest dreams of 
our great-grandfathers ; and were our own eyes fully 
opened to the possibilities of our future progress, they 
would be dazzled by its splendour. Only, between us 
and the land of promise, there still stands, blocking 
the path, a mountain, as it were, of human folly. 
Intelligence and imagination can remove that mountain 
and nothing else can. We need them to overcome old 
prejudices and false traditions, to abandon our obsolete 
ana wasteful methods of production, and to inaugurate 
a second and still more marvellous industrial revolu- 



THE NEW FALLACIES OF MIDAS 271 

tion ; we need them to establish harmony between the 
classes, to make a full end of the foolish and enfeebling 
antagonisms of the past, and to unite the energies of 
all in»the achievement of a common purpose. We need 
them lastly that we may lay wisely the foundations of 
our future progress, whether by an even-handed dis- 
tribution of industrial profits and economic power, 
or by a wise expenditure of public money upon the 
health of the people, and upon the very education 
which will give us the qualities of character we need. 
For the lessons we must learn (let us repeat) though not 
to be learnt fully indeed in the short years and limited 
experience of school life, are there at least first to be 
impressed upon the future citizens of the State ; 
and it is these early impressions, received at the most 
impressionable age, which count the most. For this 
reason we must see to it that the sudden enthusiasm 
for education to which the war has lately roused us, 
is not thrown away or misdirected. The call for a 
more widespread, more prolonged and more effective 
education is genuine and urgent ; but it is to be inter- 
preted in the widest and most liberal sense. It must 
not merely be a call for better technical instruction, 
which will enable us to hold our own with foreign 
nations in the race for prosperity or power ; equally, 
and indeed far more do we require an education which 
will impart a saner and truer outlook upon life, which 
will give us the wisdom and the will to solve the 
thousand problem.s now confronting us at home, and 
which by upholding new ideals of discipline and duty 
will achieve here in England victories even more 
honourable and more permanant than the conquests 
of trade or war. 

To some thinkers it has seemed that the Industrial 
Revolution was a mistake, a false step in the world's 
history. In their eyes the curse of machinery out- 
weights its blessings ; the ugliness and artificiality of 



272 NEW FALLACIES OF MIDAS 

modern life disgusts them ; and so in their search after 
the secret of what human society should be they would 
turn back to those free agricultural peoples, on whom 
the curse has never fallen. In the life of the yeoman 
farmer or peasant proprietor they see the nearest 
possible approach to the ideal life ; nor can we deny 
that there is something of the ideal in the life which 
such men lead. Owning their property and working 
for themselves, they find in their task a happiness and 
satisfaction not known to those who work for hire. 
Their character, for the same cause, develops a 
sturdy independence ; they are no respecters of 
persons ; they recognise no differences of class ; they 
scorn the servile impotence which would relinquish 
to others the entire control of public government. 
Theirs, too, is a life more natural to our kind than the 
life of the towndweller ; their days are spent in the 
healthy air ; their minds are attuned to tne beauties 
and mysteries of nature ; and from their varied task 
calling as it does for a constant exercise of wits and 
skill, they gain a shrewd knowledge of both things and 
men. Seldom indeed perhaps never, has this ideal 
picture been fully realised in fact.* For all that, we 
have no right to question that such a society might 
have been evolved, may even now in some countries 
be in course of evolution. But for ourselves, when we 
accepted the alternative of an industrial growth, 
that ideal ^yas put once and for all behind us ; we can 
no more retrace our steps or win back our old simplicity 
of life, than Adam and Eve could recover their inno- 
cence, when once they had tasted of the tree. And, 

* The ancient civilisations of Greece and Rome perhaps came very 
near to it ; but then they were built up upon a foundation of slave 
labour. Chaucer's England gives us another glimpse of its possibilities 
but even there the back of feudalism was as yet scarcely broken 
Perhaps the peasant proprietors of modern France have the best claim 
to have realised the ideal. Certainly they are happy and intelligent 
industrious and contented ; which is more than can be said of most 
nations. 



THE NEW FALLACIES OF MIDAS 273 

like the apple of that tree. Industrialism has indeed 
brought with it an attendant curse. We cannot be 
blind to the blemishes of modern life, the injury to 
health, the degradation of character, the restless habits 
and unwholesome morality of our great towns. Worse 
even than these have been the pernicious by-products 
of the industrial system, the tyranny of masters, the 
servile condition of the masses, the accumulation of 
property in the hands of the very few. It is as though 
man ha\ing created for his use a vast and powerful 
engine, had suddenly been caught into its coils, trans- 
formed as it were into a part of its mechanism, and 
constrained to slave like a turn-spit dog, to keep the 
monster in perpetual motion. So immense and com- 
plex has the organisation of modern industry become 
tnat it seems to overwhelm and crush out the indivi- 
duality of men ; for employer and employed alike 
business has been stripped of its human element ; 
both are equally the slaves of a soulless system which 
they must obey or perish. We have lost the old com- 
pleteness, the poise, the self-sufficiency of life which the 
agricultural society at least possessed ; and we have 
paia the price of material prosperity in forfeiting our 
peace. Yet there is no reason to despair : the step 
which we have taken has brought difficulties and 
dangers obvious enough ; but they should not obscure 
the potentialities which lie behind. The Agricultural 
Society, we should remember, is of its very nature 
static ; it has no future and what it is to-day, it will 
be to-morrow ; and a century hence it will be still the 
same. The Industrial Society on the other hand has 
opened out new and inexhaustible fields for human 
activity. Consider (to name but one or two) how, by 
means of the railway and the postal services it has 
multiplied the opportunities of education, social 
intercourse, and travel, how by the improvement of 
the printing press it has brought the study of art. 



274 NEW FALLACIES OF MIDAS 

literature and science within the reach of all, and (more 
important still) how by the reduction of working horns, 
it will soon have furnished all with the leisure to enjoy 
and profit by them. What further possibilities of 
social, political and intellectual life the future holds 
in store, we cannot tell ; but of this we may be certain, 
that under the sifting test of time the chaff of Indus- 
trialism will be shed away, and the good seed remain. 
Man will not remain at the mercy of the system of which 
he is himself the author ; but his emancipation must 
come by pressing forward, not by hesitation and regrets. 
Only further education can complete what education 
has begun. For the self-same faculties which caused 
the fatal web to be woven, will prove also the clue to his 
release, and the mature developments of science and 
invention will correct the imperfections of their 
infancy. The dangers of a little knowledge are pro- 
verbial ; but the proper antidote is more knowledge 
and not less. So for us there can be no drawing back. 
If our organisation is at fault, we must better our 
organisation, not destroy it. If the individual's share 
therein affords him too small a measure of responsi- 
bility and freedom, we must train him to deserve a 
larger. And, as the State's organisation and the 
individual's efficiency advance from strength to 
strength, each will react upon the other, the State 
working more smoothly because it is better served, the 
individual gaining greater freedom because he has 
found the part to play which fits him best. And 
meanwhile as men's interests and sympathies meet 
upon new points and unite in the common exercise of 
new activities, not only will the bonds which bind 
Society together become stronger, more intimate, and 
better understood, but for each member also there will be 
ampler means of self-expression and a freer scope in the 
choice of them. The State, in other words, will be 
more a State, the individual will be more an individua 



THE NEW FALLACIES OF MIDAS 275 

than ever was either before. The Industrial order of 
Society is no mistaken or chance development ; it is 
a necessary stage in the ascent of man. Just as the 
advance from animal to human life involves deeper 
sorrows and more searching pains, as well as finer 
pleasures and nobler tastes, so it must be also in the 
advance from the simpler forms of civilisation to the 
more complex. Life for the people of the old order 
was doubtless happy ; but it was limited, partly by 
its inevitable isolation, partly by its preoccupation 
with the struggle for daily bread. The society of the 
future will be more vital, more nervous, more given to 
introspection, experiencing emotions more subtle and 
more intense. Will it be happier ? We cannot say ; 
for its pleasures will be of another quality and its 
happiness will stand upon a different plane. Is this 
then progress ? We call it so ; but all we know is 
that the impulse of our nature compels us to move 
onward, always adding to our knowledge, always 
widening our experiences. And once we have tasted 
the sweets of fuller knowledge and once the horizon of 
our experience is enlarged, then to return to the old 
ways of comfortable ignorance is no more possible for 
us than for man to become a brute again, or for Adam 
and Eve to recapture the first innocency of Eden. * 

(ii.) 

But, though with the dawn of clearer knowledge, 
wider sympathies, and fuller powers all the malign 
influences of economic life will disappear like evil 
spirits at rising of the day, yet after all the rest are 
vanished, one obstinate spectre still remains behind. 
Wherever business is transacted by bargain and 

* The source of future development has been well summarised by a 
sentence in Mr. Ashbee's book " Where the Great City Stands." " As 
Hellenic civilisation made the gentleman with the aid of the slave, so we 
may make the gentleman with the aid of the machine." 



276 NEW FALLACIES OF MIDAS .: 

exchange, there competition will also be ; and never 
so long as buyers buy or sellers sell, can the law of 
supply and demand be driven altogether from the 
market place : least of all will it be absent from the 
Industrial State, where each individual citizen so far 
from being self-sufhcing, is infinitely dependent upon 
the activities of others. Values will still vary ; rare 
gifts, rare services, rare strength still command high 
prices because the need for them is urgent ; common 
gifts and common services command low prices, 
because the supply of them is easy. Nature's Law 
is stronger than education, stronger even than Demo- 
cracy, and neither of these can avail to make all men 
equal, simply because nature has not made them so. 
The most that they can offer (and in truth it is little 
enough) will be a fair field for competition, an equal 
opportunity for all. Competition itself and all that 
competition involves, not even the strictest Socialism 
can quite eliminate. However free may be the passage 
up the ladder of advancement, and however surely the 
best and ablest may rise towards the top, it is certain 
that a large proportion must stay very near the bottom. 
You may democratise the House of Lords, throw even 
the diplomatic service open to merit ; but you can 
never make every man an ambassador or a peer. 
Somebody, in fact, must be satisfied with the meaner 
and humbler walks of life. There will still be coal to 
raise, furnaces to stoke, goods to carry, bricks to lay, 
and so millions of men and women must continue, as it 
seems, to grind out their souls or exhaust their bodies 
upon the deadening monotony of such menial labour. 
You may shorten hours, enliven work, improve 
conditions ; but the uncomfortable fact remiains that 
to spend the best part of the day upon an exacting 
routine of physical labour is not the ideal of what life 
should be. It may be true enough that many artisans 
lead happy lives, love their work, and possess varied 



THE NEW FALLACIES OF MIDAS 277 

interests and cultivated tastes ; yet no sensible father 
who was free to name a profession for his son would 
choose that he should spend his days in heaving coals 
frorn grimy sacks into suburban cellars or oiling the 
works of a throbbing thundering machine. Worse 
still, as though it were not enough that such tasks 
should be dull and disagreeable, nature has contrived 
that for the most part they should also be ill- paid ; 
so that those men who more than any seem to need the 
compensations of a comfortable home and cultured 
leisure, are in fact the least able to afford them. For 
such as these there is but cold comfort in the promise of 
democracy, if it means no more than one out of every 
hundred shall win his way to better things. The door 
may indeed stand open for all comers, but what of that 
if only those can gain admission who have the strength 
or skill to force a passage through the crowd ; and 
what will it profit them that the backstair entrances 
of birth and privilege shall have been closed, if for 
the vast majority there still remains the disappoint- 
ment of failure and exclusion. Dives may be ousted 
from his heritage of luxury ; and Lazarus be promoted 
in his place ; but Lazarus' brother beggars who must 
lie still outside the door, have no special cause to bless 
the chance which has been offered them only to be lost. 
When we remember how unequal are the endowments 
and advantages with which men enter upon life, and 
how large a number are handicapped or frustrated in 
the struggle by weak health or lack of recognition or a 
thousand other checks of unfriendly fortune, we must 
admit that equality of opportunity can never of itself 
establish Paradise on earth, and that though its prizes 
should be drawn without favour or regard, life must 
still on these conditions remain a lottery to the end. 

So it has seemed to some philosophers that for 
man, as for the rest of the animal world, life must of 
its very nature be always a struggle and a conflict, 



278 NEV/ FALLACIES OF MIDAS 

seeing that in the modern city, no less than in the 
primeval forest, it is the fittest and strongest and most 
capable which survive and flourish ; while the weak 
go to the wall. These thinkers have declared the law 
of natural selection to be the only source of all human 
progress ; for them the hope of the future lies in the 
triumph of the strong. But while the disciples of 
Nietsche applaud and welcome the advent of the 
super-man without thought or pity for the victims of 
his supremacy, the conscience of mankind has never 
wholly corsented to this inhuman doctrine, and as 
civilisation has advanced, it has striven more and more 
to combat the working of these natural laws and to 
place itself, as it were, above them. At all times the 
weak have been able to rely to some extent upon the 
charity of individuals, but with the gradual awakening 
of the social conscience, organised justice has begun 
to take the place of haphazard philanthropy, and public 
legislation, dealing with whole classes rather than with 
isolated cases, is busied in helping those who cannot 
help themselves. The poor, the sick, the unfortunate, 
are in part at least supported out of the pockets of the 
rich ; even the idle ne'er-do-well receives his share of 
bounty, and in a hundred ways we endeavour to redress 
the unequal dispensations of Providence by artificial 
means. But though much has indeed been done, yet 
much remains to do. The idealist at least can never 
be satisfied this side of Utopia, and we must needs look 
forward (how far into the future none can say), to the 
perfect society in which man's victory over nature will 
be final and complete. There the individual will not 
merely be indemnified against the grosser injustices of 
fortune ; his right to share with others in the good 
things of life will be permanently and incontestably 
assured. All can not perhaps be equally happy, but 
there will be an equal opportunity of happiness for 
alL Now though circumstances alone cannot bring 



THE NEW FALLACIES OF MIDAS 279 

happiness, yet happiness is for most of us very depen- 
dent upon the outward circumstances of life. Except 
for a Diogenes or a Francis, a decent standard of 
material comfort is the first condition of contentment. 
But to be well fed and well clothed is not enough ; a 
mail's soul may be starved while his body prospers, and 
for the fullest and highest development of his powers 
and personality (which alone is the secret of true 
happiness) he will also require some possession of 
material wealth. Does his taste incline to intellectual 
pleasures, he will need books ; or to aesthetic, he will 
need pictures or music. If he lacks the means, he 
cannot travel nor pursue a favourite hobby ; he cannot 
enjoy to the full the society of friends without the 
resources of hospitality, nor the companionship of the 
family without the proper conveniences of home. 
These are some of the avenues and means to a full self- 
realisation ; in which if we would be fair to others and 
honest with ourselves, we can allow of no monopoly ; 
and in the ideal society at least the right of them can 
hardly be denied to any human being. It used once 
to be the fashion to pretend that the poor are happier 
as they are, that education would be wasted on them, 
and that the pleasures of intellect and art and beauty 
can have no place whatever in their lives. To-day such 
foolish platitudes are out of date ; and anyone who 
has had experience of the working classes (especially 
perhaps of the working classes of our northern towns) 
knows them to be false. If the rich man's son is 
happier and better and more useful for the wider 
outlook and more liberal tastes which his wealth and 
education give him, the poor man's son may be so too ; 
and in the future, whatever may be the character of 
our Utopia, this one thing at least must be secured 
for each and all without distinction, an equal oppor- 
tunity with others for getting from life the best that 
life can give them. No system will satisfy an 

19 



28o NEW FALLACIES OF MIDAS 

enlightened and Christian democracy which does not 
make it ultimately possible for every child born into the 
world to realise his best and highest self. Life then 
in the ideal Society, will offer much more to a man 
than the precarious hope of drawing a winning ticket 
in the lottery of fate. His right to happiness will not 
depend on his own ability to fight his way to the fore ; 
rather will it be the inalienable privilege of his man- 
hood, permanent and secure to him whatever his rank 
or his work or his capacity. No man can do better 
than his best ; and provided that according to his 
powers he serves the community faithfully and well, 
every labourer will be worthy of his hire ; to the 
chimney sweep sweeping his chimneys, or to the road- 
mender mending his roads, no less than to the merchant 
in his counting house or the judge upon his bench, there 
will be an opportunity of enjoying whatever may make 
life for him a life indeed worth living. 

But it will be long years yet before the Golden Age 
of fable can come back again to earth ; and such a 
state of society as we have pictured is not to be estab- 
lished in a day. The zeal of the Socialist who would set 
up the Commune, and enforce equality by law,* is 

* Much has happened since these hnes were written ; and the 
equaUtarian state can now no longer be considered as a mere castle in 
the air. War, the great leveller, has given us a foretaste of its appli- 
cation ; and what once seemed the fantastic dream of communists, 
has been translated by the Food Controller into concrete fact. For 
the first time perhaps in history rich and poor have stood on an equal 
footing as concerns the chief necessities of life. Tea and sugar, meat 
and margarine have been distributed without regard for wealth, quality, 
or condition. The experiment has of course been limited and incom- 
plete : it has touched but one side of economic life : nevertheless 
it has done much more than simply to tide over an awkward situation. 
It has established a precedent. What legislation can achieve in war, 
it can also maintain in peace : and who shall say whether the masses, 
having once tasted the benefits of an enforced equality, will lightly forgo 
the opportunity of its perpetuation ? Such a course appears in the last 
degree unlikely : for it is out of keeping with the English character : 
but now at least if never before, it has become practical politics. The 
reproach of Communism has been done away, and it demands even if it 
does not deserve our serious consideration. 



THE NEW FALLACIES OF MIDAS 281 

dangerously misplaced, and however much we may 
sympathise in his aspiration for the end, we cannot but 
condemn the means. For the remedy of Communism 
must be ineffectual, simply because it is too complete. 
It cuts the knot of the problem, it is true, in the simplest 
possible fashion, rectifying inequality by destroying 
competition, defeating Nature by defying her. But 
it is not so that Nature can be treated with impunity. 
We may submit to her as our mistress, or tame her as 
our slave, but we cannot banish her altogether from 
the world. To accomplish man's perfection, we must 
first accept him as he is, recognise his temptations and 
his weaknesses, and meanwhile remember that the 
same impulse which drives him to the Devil, may 
equally prove the salvation of his soul. Virtue and 
vice are only opposites in so far as they are the right 
use and the wrong use of the same thing. To convert 
man s weakness into strength, to guide his natural 
impulses from wrong channels into right, that is the 
true task of the reformer ; but to ignore altogether 
the existence of those impulses, is no less dangerous 
than it is absurd ; as well might the man who designs 
an aeroplane omit the law of gravity from his calcu- 
lations. This, then, is the Communist's (and in a lesser 
degree the Socialist's) mistake, that he undertakes to 
alter human nature by the simple but foolish process 
of pretending that it is other than it is. In the attempt 
to make the individual happy he would end by making 
him something which was not an individual at all. 
For the essence of individuality lies in a man's right 
to realise his self in his own way. A man must be his 
own keeper before he is his brother s, and his ideals are 
for himself alone to form. Now tastes differ ; one 
man's meat is another man's poison ; Mary listens 
while Martha serves. There are, broadly speaking, 
two types of men in the world ; one which is ambitious 
for material wealth and will work night and day to get 



282 NEW FALLACIES OF MIDAS 

it, another which has no such anabition, but prefers 
moderate wealth conabined with leisure to the alter- 
native of luxury and toil. Both are legitimate ideals, 
but Communism demanding equality of rewards and 
equality of service, could tolerate neither ; the man of 
the first type must devote the hardwon profits of his 
industry to the common stock, and himself gain no 
direct advantage ; the second must sacrifice his love 
of leisure ; and bear his full part in the burden of pro- 
duction. In short, the ideal of complete equality could 
only be practicable in a community of saints or slaves. 
The fundamental instinct of the normal human being 
rebels against such a system. For him the end and 
purpose of all effort is the satisfaction of desires ; and 
while he does not expect to receive where he does not 
give, neither is he inclined to render services without 
the expectation of rewards, and rewards too that are 
proportionate to the service. Communism is against 
the grain of our nature ; we do not wish to have all 
things in common with our neighbours, not because we 
grudge them a share in what is ours, but because we 
want it to be ours before it becomes theirs ; so any 
attempt to standardise mankind, to support one class 
by the exertions of another, to penalise the efficiency 
of Peter in order to indemnify the inefficiency of Paul, 
is bound ultimately to fail. For, as in medicine cures 
can only be effected through obedience to physical 
laws and it is a dangerous experiment to treat a diseased 
limb by draining the vitality of the other members, 
so in economics health is to be sought not by working 
against nature, but by working with her. She is a good 
ally, but a bad enemy ; for she never fails to conquer 
in the end. Competition is her own method of selec- 
tion ; and no other can permanently take its place. 
Ana, if we believe that Nature knows best hov\^ to fit the 
individual to his proper function, we must also trust her 
power to make that function worthy of his humanity. 



THE NEW FALLACIES OF MIDAS 283 

(iii.) 

Though man audaciously proposes, man does not 
himself dispose. Philosopl ers may philosophise, 
reformers may preach reform, and legislators pass their 
laws ; but it is not from these that great changes take 
their origin ; it is from the deep elemental forces, often 
incalculable, and for the most part incontrollable, 
which drive us onward along the road of destiny. 
The reformers themselves are after all but the mouth- 
piece through which is expressed the deep and inarti- 
culate impulse of the race. The laws are nothing 
more than the visible embodiment of a popular instinct 
or the outward acknowledgment of some pressing need. 
It was the Renaissance and not Luther that made the 
Protestant religion ; England passed the Reform Bill 
and not the House of Commons; or again, if we ask 
what has been the chief cause of the growth of tem- 
perance in modern England, it is not the propaganda 
of teetotalers, but the general spread of education which 
has introduced new pleasures and fresh interests to 
counteract the lure of drink. So, if we try to forecast 
the economic future and to discern by what process 
a remedy may be found for the unequal distribution of 
the world's wealth, we shall seek it, not so much among 
the Statute books of posterity, or in the progress of 
Socialistic legislation, but rather io the natural develop- 
ment of economic forces. About that development 
there can, it is true, be no certainty at all : what 
external influences may intervene to change the course 
of history, we cannot tell ; it may be that out of the 
ruin and ^havoc of the European war there will arise 
such stern necessity for co-operative effort as will force 
some kind of Socialism upon us. But if the more 
natural process of selective competition still continues 
to hold the field (and as we have seen, competition 
cannot be wholly eliminated without an almost 



284 NEW FALLACIES OF MIDAS 

intolerable suppression of the individual's will), then 
it is not contrary to reason that we should look to these 
natural laws for ultiraate salvation, and it may even be 
that the same conditions which in the past have caused 
such inequalities of distribution, such wide divergencies 
of poverty and wealth, will in the future tend to produce 
the very opposite result. 

All such prophecy is admittedly guess-work ; but 
if the guess is worth the making, the manner of the 
change will be briefly this. If one thing is certain in 
the future, it is that with the advance of science, 
industrial efficiency will very rapidly improve, and as 
processes become more elaborate, it is clear that a 
larger and larger proportion of the world's production 
will be effected by machines. As the call for skilled 
mechanics or semi-skilled machine-minders increases, 
the call will easily be met by a corresponding increase 
of educational facilities. Already we have discovered 
(especially during the course of the war itself) that it 
now needs no extraordinary or superior intelligence 
to handle a lathe or even to operate an intricate 
machine. Women with a bare six month's experience 
have undertaken functions which hitherto have been 
jealously regarded as the prerogative of the highly 
skilled workman. So, long before the progress of 
scientific production has reached its full development, 
it will be found that the large mass of unskilled workers 
now employed upon purely manual labour, will have 
been absorbed into the ranks of the skilled or semi- 
skilled. Now, when that has happened, there will none 
the less reniain some tasks whicn still require nothing 
but brute strength or naere application without 
intelligence. But when the nation is mainly com- 
posed of educated men and women, when the wastrel 
has almost disappeared and even inefficiency is rare, 
there will be little competition for such jobs. The 
time may come when it is more difficult to find a man 



THE NEW FALLACIES OF MIDAS 285 

to sweep a crossing or clean out a drain than to mind 
a spinner or a printing press. In fact the casual 
labourer will be as scarce as he now is common. And 
when that time is reached, the inevitable result will 
follow. The action of economic law is not to be denied. 
As the supply of skilled workmen becomes abundant, 
exceeding the demand, the reward of skilled labour 
will diminish, while on the other hand, the reward of 
the unskilled labourer who is hard to come by, will 
correspondingly increase. And just because skilled 
labour (involving as it does a higher exercise of human 
faculties) is more interesting, more dignified and for 
the most part more pleasant than unskilled labour, 
it will lemain more popular even when it is less highly 
paid. Already we can see to-day how many men 
prefer the meagre salary of the clerk or the elementary 
school teacher to the comparative opulence of a pit 
hand or a mechanical engineer ; and if the " black- 
coated " professions continue to attract men in spite 
of their financial disadvantages, we may be sure that 
the same will hold true of skilled as against unskilled 
labour. Even in professions of a higher rank, a similar 
result will follow. When there are as many men 
competent to fill the manager's chair as there now are 
to sweep out his office, it is pretty certain that the post 
will be less remunerative than it now is. In short, 
there will be established a kind of equipoise between 
the various grades of labour ; there will be a more 
general diffusion of prosperity and the reward of differ- 
ent services will in some measure be equalised for the 
simple reason (and it is the only sound reason for 
equality) that the demand and supply of those services 
will be equal too. 

Thus the whole scale of values, as we know them, 
will have undergone a revolutionary change ; and yet 
in the new scale there will be no injustice. The material 
reward of the more intelligent and energetic will it is 



286 NEW FALLACIES OF MIDAS 

true be less ; but their real reward will lie in the superior 
character of their activities. For the man whose work 
is interesting and pleasant, his work will be its own 
reward ; nor will he grudge the man whose work is 
unpleasant and monotonous the merited compensation 
of a higher wage, and a fuller enjoyrnent of the 
material benefits of life. And so with this revolution 
in money values there will come a transformation of 
ideals too. Men will begin to value their work and their 
profession for its own sake rather than for its financial 
rewards. Instead of seeking the most profitable job, 
they will prefer that which best suits their ability and 
tastes. Competition will no longer be a senseless 
struggle after material wealth, and a vain pursuit of 
imaginary advantages, which in the toil and hurry of 
getting we have scarcely the zest or leisure to enjoy. 
It will rather be a sane and healthy rivalry for the 
enjoyment of those callings and activities which can 
best enable men to realise their highest faculties and 
fullest powers. And in the day when that transforma- 
tion is accomplished, we shall not be far distant from 
the Kingdom of Utopia. 

The truth is that with the hey-day of a new-found 
prosperity our sense of proportion has been blurred ; 
and in the warped vision of the modern world the old 
fallacy of Midas is re-enacted. Blinded by the false 
glitter of our own good fortune we have forgotten that 
material wealth (like Midas' gold) is not an end to be 
pursued for its own sake, but a means to an end beyond 
itself. That end is the development of human person- 
ality. Riches have indeed their value ; for they form 
the very basis of civilised existence ; but it is a 
secondary value. If we put them in the forefront of 
ambition, we are mistaking the purpose for which 
life was given us. Stevenson once said, that to be 
wholly devoted to some intellectual exercise, is to 
have succeeded in life. That is a partial and 



THE NEW FALLACIES OF MIDAS 287 

exaggerated summary of life's purpose ; but at least 
it sets a right emphasis where emphasis is due. True 
success is not to be measured by what a man is worth 
according to the financier's reckoning, nor even by 
what he has achieved (though that is a worthier 
standard), but simply by what he is. Material 
possessions or practical activities are nothing except 
as they contribute to the building of a man's character 
and as they serve to promote his genuine happiness and 
welfare. True wealth in short does not lie within the 
narrow limits of material satisfactions ; it is the sum 
total of life's opportunities, not those opportunities 
alone which can be bought with money, but also those 
which his work and his leisure bring him. He is rich 
or poor according as these are great or small. He 
succeeds or fails according as he uses them well or 
uses them badly for the fullest realisation of the best 
that he can be. Man can no more satisfy the cravings 
of his spirit by the increased output of factories or the 
scientific exploitation of the world's resources than 
Midas could satisfy his bodily hunger upon gold. 

That is one lesson that we may learn from the old 
fable ; and there is another; — that just as for Midas 
there was no short cut to fortune through the freak of 
a fairy-tale wish, so we must expect no miracle of 
reform or legislation to end all our troubles in a night 
time. Before the world can shake free from the 
entanglements of circumstance into which its own 
misguided policies have brought it, the ancient truth 
which Midas had forgotten must be understood anew. 
For we too are in danger of forgetting that, while man 
may make nature serve him, he must still in a sense 
remain her slave. Effort is the only road to success 
which she will recognise. Struggle is the stern necessity 
which she has laid upon man ; and man must bow 
to her decree. So long as individuals preserve their 
individuality at all, it is inevitable that there should be 



288 NEW FALLACIES OF MIDAS 

rivalry between them. Destroy competition and the 
salt is taken out of life ; impose an artificial equality 
upon a people and the mainspring of their progress 
will be gone. Rivalry there must be both now and 
always. But let it be rivalry for noble ends ; not a 
blind conflict for a barren supremacy of gain ; let each 
expect his recompense no less from his work than from 
his wage ; let him honour the privilege of service no less 
than he prizes the material benefits of success ; and 
then as the race rises to the fulness of its powers, we 
may have good hope that nature's own method of 
competitive selection will turn to man's advantage, 
and that for the weakling and the dunce no less than 
for the strong and clever there may yet be found the 
opportunity of a worthy life and a full and generous 
share in life's good things. 

For to believe in man's future is to have faith also 
in something greater and stronger than man. If he is 
indeed something better than a pawn in the hands of 
Fate, and if his life is something more than a gamble 
with blind chance, then we must believe that the Power 
which does not overlook the falling of a sparrow, will 
surely take thought also for the happiness of the 
individual no less than for the progress of the race. 
Nature may seem often cruel and callous, exulting in 
the war between her creatures and careless of the 
single life. But if we believe at all in the essential 
goodness of the divine purpose, we must needs believe 
also that men are meant to be happy in this world, and 
that out of the clash and contraiety of human interests 
some means of reconciliation can be found. When we 
feel that amid all our perplexities and troubles we are 
moving to the consummation of a perfect plan, it is 
something more than the pious fancy of orthodox 
religion that is the earnest of our faith. In the laws 
of our own nature we discern the hand of God. In the 
observance of those laws we know that all human 



THE NEW FALLACIES OF MIDAS 289 

happiness consists ; obeying them we reap the fruits 
of harmony and health ; disobeying we fall into strife, 
suffering and decay. And because in these laws is 
contained some promise of an ultimate perfection, to 
discover and to observe them is the whole duty of man. 
Only when the call of whatever is highest and noblest 
in our being has been heard and answered will 
Society enter at last upon that peace in which the 
diversity of its members shall be blended in a perfect 
unity, and the power to lead a worthy, full and happj^ 
life shall be the universal birthright of mankind. 



INDEX 



Activity, a form of work, 21. 

Adventure, spirit of financial,226. 

Advertisement, wasteful use of, 
52. 

Agriculture, 185, 241. 

Agricultural civilisation com- 
pared with industrial, 272. 

American methods of production 
and management, 54, sqq. 

Appetites, insatiability of human, 
36. 

Apprentices, statute of, 133. 

Aristocracy, power of, 184. 

Aristotle, 15. 

Armaments, wasteful, 49. 

Ashbee, 275. 

Askwith, Sir George, 138. 

Athens, lack of dra-inage, 39. 
view of labour, 15, 206. 
State theatre, 260. 

Australia, industrial arbitration, 
147. 

Bargaining, between rich and 
poor, 106. 

liberty of, 214. 

temptations of, 51, 
Belgium, population of, 34. 
Belloc, Hilaire, 186, sqq. 
Benefit funds, 136. 
Bethlehem steel works, 56. 
Black death, 108. 
Bolshevist, 260. 
Bounties, state, 126, 240. 
Boy Scouts, 23. 
Briand, 167. 
Bright, John, 117. 
Bureaucracy, 67, 168. 
Burns, John, 135, 150, 184. 
Business methods, see Commerce. 
Business firms, increasing size of, 
245- 



Capital, definition of, 27. 

examples of, 24. 

monopoly and competition in, 
105. 

self -productive, 105. 

uses differ in value, 30. 

to be shared by workers, 254. 

to be hired by Labour, 259. 
Capitalist, advantage over work- 
men, 106. 

lack of sympathy with workers, 
III. 

natural function, 243. 

place in future, 257. 

power of, 104 sqq. 

value of, 224. 
Ca' canny, 145. 
Cain, Tubal, 17. 
Caxton, 19. 
Character, importance of 

national, 269. 
Charity, 187. 
Chartists, 159. 
Chesterton, 211. 
Chinese mandarin, 13. 
Christian ethics, 119, 130, 166. 
Cobden, 117. 
Coles, G. D., 202. 
Collectivism, 150, 217. 

represents cor.sumers' mterest, 
161. 
Combination laws, 133. 
Combination equivalent to 

monopoly, 92. 
Commerce, molality of, 88, 122. 
Commission, Royal, 135. 
Communism, 75, 157, 165. 

unnatural, 280. 
Competition compared with 
monopoly, 91. 

inevitable, 276. 

nature's method, 282. 



290 



INDEX 



291 



remedy- for stagnation, 228. 

Ruskin's; views of, 120. 
Complexity of modern life, 21. 
Compromise in industry, 234. 
Conciliafon between Labour 

and Capital, 146. 
Conditions in workshop, 147. 
Confiscation proposed by 

Socialists, 162. 
Conscription, Industrial 215. 
Consumer protected under col- 
lectivism, 161. 

and producer, 47. 
Consumption and investment, 25. 

and production, 127. 
Co-operation, 76. 

the spirit of the age, 115. 

the keynote of Socialism, 166. 
Co-operative Society of Con- 
sumers, 173. 

membership of, 174. 

wholesale enterprise, 175. 

productive enterprise, 175. 
Co-partnership, 249. 
Corn production in England, 34. 
Corn Laws. 116, 
Cotton trade, 245, 256. 
Custom, its influence on bargain- 
ing, 86. 

Demand and supply, 83, 123. 
Desires, progressive increase 01, 

36. 
Discipline of workshop, 246. 
Division of labour, 18. 
Drink index of wealth, 117, 283. 

Earth, source of all wealth, 10. 

Education, 67, 268, 271. 

Educational Association, Work- 
ers', 73. 

Efficiency, 172. 

Employees, see Labour. 

under Co-operative Societies, 
179. 

Employers, see Capitalist. 

Employers' Liability Act, 137, 
189. 

Engineers, 147. 

Equalitarian state, 280. 

Equality of opportunity 276. 



Ethics of commerce, 129. 
Exchinge inevitable to-day, 87. 
Expropriation, 162. 

Fabian Society, 160, 178. 
Family, 213. 
Feudalism of land, 95. 

of industry, 149. 
Food control, 280. 
Fourier, 157. 
Freedom, 66, 210. 
Free trade, 114, 242. 
French character, 197. 

labour movement, 198. 

syndicalism, 152. 

Gas, 162. 

George, Henry, 100, 159, 

George, Lloyd, 42, 171. 

Germans, 65, 172, 269. 

German kartels, 140. 

Gold not in itself wealth, 8, 81. 

fluctuations in value, 81. 
Greeks valued simplicity, 69. 

view of work, 15, 206. 
Guilds, mediaeval, 99, 104. 
Guild Socialism, 209 sqq. 

Handicrafts, 70. 
Hardie, Keir, 150. 
Hood, Thomas, 71. 
Houses, 224. 
Hyndman, 160. 

Income, average of national, 233. 
probable increase, 233, 252, 
256, 270. 
Independent Labour Party, 160. 
Individual and State, 274. 
Individualism, 114, see Man- 
chester school, 
justification of, 237. 
services of, 221. 
theories of, 259. 
Industrial Revolution, 133, 271. 
drives populations into towns, 

96. 
effect on capitalist, 113. 
effect on poor, 106. 
effect on wages, 109. 
Industrial state com paired with 
agricultural, 272, 



292 



INDEX 



Insurance Act, 137, 171. 
Insurance, Life, 270. 
International Working Men's 

Association, 159. 
Investment, 105. 

and consumption, 25. 

by workers, 255. 
Ireland, free land in, 99. 
Iron industry, 263. 
Isolation, effects in middle ages, 
93- 

Jingoism, 208. 
Johnson, Doctor, 55. 

Kartels in Germany, 140. 

Labour, see Work. 

Labour and Capital see Capital. 

Labour, ill-paid, 128. 

exploited, 148, 204. 

to hire capital, 259. 

unorganised, 194. 
Labour party, 136, 160. 

and Co-operatives, 176. 
Labour Party, Independent, 160. 
Labour colony, 189. 
Land, monopolies of, 95. 

in Colonies, 96, loi. 

in Ireland, 99. 
Landowners, dispossession of, 163. 
Law against combinations, 133. 

Agricultural, 123. 

Corn, 116. 
Legislation, class, 189. 
Leicester stocking makers, 117. 
Leisure, 22, 72. 
Liberty, 171, 210. 

to bargain, 214. 

to save, 216. 
Lock-out, 139, 239. 
Losses to be shared by workers, 

254- 
Luxury, 39. 
defence of, 40. 
arguments against, 42. 

Macdonald, Ramsay, 160. 
Manchester school, 113, 207, 217. 

not opposed, 116. 
Machinery, William Morris 
condemns, 70. 



Machine-minding, 71, 284. 

Majority, rights of, 209. 

Mallock, 233. 

Malthus, 33. 

Man, primitive, 16. 

Management, scientific, 55. 

Manager in business, 244. 

Mann, Tom, 135, 150. 

Marx, 158. 

Mercantile marine, 215, 238, 

239. 
Milk, 242. 

Mill, John Stuart, iii. 
Milton, 124. 
Mines, 238, 239. 
Minimum wage, 125, 143. 
Ministry of Agriculture, 185. 

of Munitions, 144. 
Money absent in Utopia, 75. 

measure of value, 81. 

necessary, 87. 
Money, Sir Leo Chiozza, 241. 
Monopoly, 91 sqq. 

limits of, 94. 

of capitalist, 148. 

of combined strikes, 132. 
Monopolies, natural, 228, 238. 
Morality in commerce, 88, 122, 

129. 
More, Sir Thomas, 59, 60. 
Morris, William, 60, 160. 
Miinsterberg, 57. 

Natonalisation of railways, 

mines, etc., 151. 
Nationality, spirit of, 77. 

despised by Syndicalists, 152. 
Natural monopolies, 228, 238. 
Nature, her part in production, 
II. 

rejects communism, 280. 
Necessities and luxuries, 39. 
Non-Unionists, 141 sqq. 
Norwich, 150. 

Officialdom, 168. 
Opportunity, equality of, 276. 
Organisation of labour, 18. 

of Masters, 140. 

of Trade Unions, see Unions. 



INDEX 



293 



Overtime, 143. 
Owen, Robert, 159. 

Pensions, Old Age, 137. 

Pericles, 69. 

Philanthropy and business, 262. 

Picketing, peaceful, 141. 

Piece-work, shop, 251, 264. 

Plato, 40, 59. 

Political economy criticised by 

Ruskin, 119. 
Political development, economic 

analogy with, 258. 
Poor, conflict with Capital, 106. 
Population, increase of, 34. 

shifts to towns, 96. 
Post Office, 162, 167, 238. 
Prices, fair, 87, 128. 
Primitive man, 16. 
Production and consumption, 127, 
129. 

means of, 103, 149. 

sources of, 10, 103, 149. 
Production, industrial, 

future increase probable, 254 

maintained by women, 20. 

speeding up of, 266. 
Profits, industrial, 248. 
Profit-sharing, 249, 263. 
Property a stimulus to indi- 
viduals, 169, 255. 
Protective tariffs, 126. 
Railways, effects of first, 116. 

nationalisation of, 151, 169. 

strike, 245. 

waste on, 54. 
Redistribution of wealth, 219 

233- 
Rents in towns, 97. 
Retail trade, 54, 55. 
Revolution, French, 157. 

Industrial, see Industrial Revo- 
lution. 

Russian, 154. 
Ricardo, 98. 

Rochdale Co-operators, 174. 
Rosebery, Lord, 178. 
Ruskin, 22, 72, 118 sqq. 
Russia, drink, 49. 

population, 33. 

revolution, 154. 



Sabotage, 146. 

St. Simon, 157. 
Science, use of, 104. 
Scientific management, 55. 
Scottish Co-operative Society, 

181. 
Self-expression in work, 14. 
Self-government in workshop, 

246. 
Selfridge, Gordon, 247. 
Self-sacrifice, 232. 
Shaftesbury, Lord, 117. 
Shop piece-work, 251, 264. 
Simplicity of life, 68, 74. 
Skill as basis of value, 123. 
Skilled workers, 284. 
Slavery, industrial, 204. 
Smith, Adam, iii, 134. 
Socialism, 156 sqq. 

advantages, 165. 

and Co-operative method, 174. 

a result of the war, 185. 

criticised, 211 sqq., 280. 

justified in part, 237, 259. 

life under, 230. 
Socialism, Guild, see Guild 

Socialism. 
Spain and gold, 8. 
Spartans, 231. 
State and individual, 217, 274. 

bounties, 240. 

interferences, 239, 243. 

identical with people, 200. 
Statute of apprentices, 133. 
Stephenson, Robert Louis, 268, 

286. 
Stockholm, 159. 
Strike, 132, 239. 

against Sociahst Government, 
167. 

Dock, 135. 

in 1912, 151. 

Railway, 197, 245. 
Supply and demand, 83, 276. 

criticised by Ruskin, 120. 
Syndicalism, 132, 197. 

advantages, 222. 

justified in part, 237, 259. 
Syndicat, 132. 

Sweden, employers and em- 
ployees, 139. 



294 



INDEX 



Swift, Dean, 33. 

Taff Vale decision, 137. 
Taylor, James, 55. 
Telegraphs, 238. 
Telephone, 162, 168. 
Temperance, 283. 
Thrift, 172. 

Times, quoted, 143, 194. 
Trades Unions, see Unions 

Congress, 150. 
Trusts, 92. 



Unearned increment, 97, 
Unemployment, 108. 

benefit, 191. 
Unions, Trades, amalgamation, 
140. 

disadvantages, 144. 

membership, 135, 139. 

old Unions, 134, 150. 

oppose profit sharing, 264. 

record good and bad, 205. 
United States, see America. 
Unproductive labour, 49, 

Value, money as a basis, 81. 

skill as basis, 123. 

will be transformed, 285. 
Vodka, 49. 



Voters' power under Socialism, 
167. 

Wages, just, 87, 128. 

minimum, 125 sqq., 145, 240. 

standardisation of, 122, 215. 
Wallas, Graham, 14. 
War gives power to workers, 153. 

wealth of rich increased by, 
184. 
Waste of effort, 56. 
Wealth defined, 9. 

probable increase after War, 

254- 
redistribution of, 219, 233. 
Wells, H. G., 59, 68, 193. 
Witley Report, 245. 
Women in industry, 125. 

maintain output during war, 
20. 
Work, complexity of modern, 
21. 
love of, 13. 
manual, 15. 

necessary to production, 11. 
right to, 12. 
unproductive, and productive, 

47- 
Workers, see Labour. 

Educational Association, 73. 

Zimmern, A. E., 69. 



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